Peter Simpson-Morgan

Activism, Done Correctly, Protects Shareholders From Stupid Management Decisions

During his recent interview with Tobias legendary Australian fund manager Peter Simpson-Morgan, who ran Perpetual, discusses his approach to activism and the importance of protected shareholders from stupid management decisions saying:

Peter Simpson-Morgan: It was entrepreneurial sort of start. And as we grew, I…again, not trying to be arrogant with it, one of the things that we learnt when we were managing large and larger amounts of money, you can’t always move, particularly in somewhat illiquid stocks, the money around. We have this time when I’m more and more aggressive in trying to direct companies, in terms of their thought process, and took companies on at AGMs, where we thought they were doing stupid things, and became quite public about it, but only for the reason it was being used as a tool to try and protect our position and… I can still remember it, we took AMP on an AGM, after they had listed, they, you know…a lot of Australian companies have done, they were overspending the free cashflow and making stupid acquisitions overseas.

Peter Simpson-Morgan: We were one of the first companies that went to a AGM, and voted against a remuneration plan. We’re quite vocal as to why, and lead to change in terms of that executive team. And I was one of the ones that lead that process, but it then encouraged others within Perpetual to do the same sort of thing. And I remember Matt and John both, and we all came together and went down that path to try and protect ourselves, in terms of our position, as we grew.

Peter Simpson-Morgan: From that, as I said, for no other reason, we always knew that we were managing other people’s money. And we were trying to perform for those. It wasn’t our money that we were managing, it was other people’s, and we had to protect it.

Tobias Carlisle: So, that’s maybe an early form of activism in Australia. Was anybody else doing anything like that? Are you guys introduced that?

Peter Simpson-Morgan: Well, we didn’t introduce it for the sake of introducing it…I hope it doesn’t sound reckless, but we were trying to learn…we were learning as we went along, Toby. I mean…I should also say, I think one of the things that gets me is you’re not going to get every call right. And if you’re getting 7 out of 10 calls right, you’re doing a fantastic job.

Peter Simpson-Morgan: And the 3 that you’re not getting right, you’ve got to try…imagine more and more money, you’ve got to try and work out a way of trying to save that position, or making it up elsewhere. And a lot of times, these companies weren’t bad. They weren’t bad companies, they were solid companies, but they were being badly led.

Peter Simpson-Morgan: And as I said, this is in the 1990s, yes, we were probably at the forefront of that. But it wasn’t for the sake of trying to be an activist, it was what we were trying to do to do the job that we were doing for other people.

The Acquirers Podcast

You can find out more about Tobias’ podcast here – The Acquirers Podcast. You can also listen to the podcast on your favorite podcast platforms here:

For more articles like this, check out our recent articles here.

Article by The Acquirer’s Multiple

Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Welcome in the new year by signing up up for ValueWalkPremium today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 1/31/2019 or after next 30 23 subscribers take advantage whichever comes first – please do not share this discount with others