Exclusive: Active investors keep markets healthy, Elliott's Jesse Cohn says
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Elliott Investment Management's Jesse Cohn speaks at Axios' BFD. Photo: Axios Live.
Jesse Cohn of Elliott Investment Management defended the firm's active investing during Axios' BFD event on Tuesday, arguing it pushes companies to perform better.
Why it matters: Cohn argued that passive investors hold a controlling interest in too many American companies, which leaves company management with little accountability.
What they're saying: "The whole premise of our markets were built on the backs of active investors, people actually choosing which companies deserve capital," Cohn told Axios' Dan Primack.
- "We can't have a situation where passive investors who are not choosing companies, who are not holding management accountable, who are not leading to market dynamism, control the votes at our largest US companies."
- "We just cannot have that. It's not healthy for us. It's not good for our economy. It's not good for our savers. It's not good for anybody with money in the market," he added.
Context: The activist firm has been aggressive in its pursuit of getting companies to make changes that Elliott wants.
- The firm expanded into podcasting last year, blasting calls for Southwest Airlines executives to step down over the airwaves.
- After Elliott relentlessly hammered Phillips 66 to sell off its midstream business, the oil refiner recently accused the firm of having a conflict of interest because it was simultaneously bidding on a competitor.
Case in point: There's a method to Elliott's approach, and it shows.
- Elliott took a $4 billion stake PepsiCo in September, and has encouraged the brand to streamline by offloading some of its lines, such as Sodastream and Cap'n Crunch.
- When the proposal was first announced, it sent PepsiCo stock soaring.
By the numbers: Elliott manages roughly $76.1 billion in assets, according to the company's website.
Go deeper: Elliott's pitch to break up Pepsi portfolio
Editor's note: This story has been corrected to reflect that Jesse Cohn was arguing that passive investors have a controlling interest in too many American businesses (not that the businesses are led by passive investors).
