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Memo to Ivory Asset Management
Subject: Long only levered activism is dead

While we don’t know anyone at Ivory Asset Management, and we are sure they are great people, we do have some advice for them, activism is dead. If the only way you can get the stocks up that you own is to throw out hail Mary activism proposals, the market is more likely to look at that for what it is, a last ditch attempt to save a bad investment.

Back in the market mania highs of 2005/2006, these strategies worked. Unfortunately, the cheap money, private equity bubble has popped, like all bubbles inevitably do, and with it so has the long only levered activist model.

Microsoft CEO Steve Ballmer has said the idea of acquiring Yahoo is dead and while the idea of doing a search deal is still alive, the likelihood of anything getting done at Ivory’s proposed $24 - $29 is preposterous at best. Ballmer understands that he will get a real shot at Yahoo if he wants it, but it will likely be at a much lower price.

The days of long only activists actually mattering are long gone. We would use Ivory’s press release investment strategy, and any short term increase the stock price that come with it, as catalysts to sell positions.

Daryl G. Jones
Managing Director