Take a stake in an undervalued company, make waves, demand asset sales, and pocket the profits.
From a short-term perspective it’s a heck of a deal.
For the long term not so much.
After the raider goes and the company is sucked dry, there isn’t much reason to stick around.
Management teams are keenly aware of this.
That’s why a company like Dupont (NYSE: DD) resist activism like its the plague.
In some ways activism is an out of control virus that ultimately destroys the host.
Still the lure of fast money works time and time again.
Today there are several companies in the cross hairs of activism.
These activists are demanding companies be split up arguing that the sum of the parts is greater than current valuations.
I’m not so sure that is true.
When you consider what is left behind after asset sales those that stick around long enough to see will find their shares worth less than before the activist got involved.
In this vein it is imperative that investors run as soon as the splits or sales take place.
If you wait too long you will be left holding an empty bag as they say.
Here are 3 companies that are shedding assets that should be sold immediately: