Activist investors back plan for companies to limit quarterly guidance

The recently launched effort by Jamie Dimon and Warren Buffett to get public companies to curb short-term thinking got some surprising allies on Thursday.

Activist investors Nelson Peltz and Paul Singer — managing more than $50 billion combined — agreed with the two CEOs that companies should ease up on sharing quarterly forecasts.

“I agree with Jamie and Warren that quarterly guidance is a problem. It’s not good,” Peltz of Trian Partners told The Post Thursday on the sidelines of The Deal’s 2018 Corporate Governance Conference.

“CEOs do unnatural acts during the quarter” to make numbers, Peltz added, noting that he found one company he invested in would slash its advertising spending during the quarter to make numbers.

“But it sure [wasn’t] giving them any tailwind in the next quarter,” Peltz said.

The support from Peltz and Singer comes as somewhat of a surprise.

Although the two hedgies are known for investing in companies for a long time, many have said that the threat of having an activist investor target an underperforming company is exactly why some CEOs chase quarterly performance over long-term strategies.

“Fear hangs over the decision-making process in most public companies as boards and management seek to avoid becoming an activist’s target,” Panera Bread founder Ron Shaich said during a presentation on Thursday.

The short-sighted chase to clear quarterly predictions — the so-called short-termism — was called out Wednesday evening in a WSJ.com op-ed penned by Dimon, the chief executive of JPMorgan Chase, and Buffett, the CEO of Berkshire Hathaway.

Singer, the billionaire investor behind hedge fund Elliott Management, echoed Peltz’ sentiments in a panel Thursday.

Reducing or eliminating the quarterly projections is “not a bad idea,” Singer said.

He said doesn’t see the “benefit of quarterly guidance” if a company misses estimates by 2 cents and its stock falls “ 30 percent or 20 percent or whatever it does.”

In their op-ed, Dimon and Buffett said quarterly guidance led to an “unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability.”

But for all of Peltz’ support, he said that Dimon and Buffett have to get all 200 chief executives of the Business Roundtable, which is chaired by Dimon, to agree to cease giving quarterly projections.


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