Emerson Electric gets called out in a hedge fund's Burn Book
The very 1st electric fans in the US... were sold by St. Louis-based Emerson Electric. Founded by a Civil War vet in 1890, Emerson's grown to become a $42B maker of electric motors and storage systems. But there's a problem: Over the last 10 years, the stock market has performed twice as well as Emerson's shares — and its competitors were 3 times better.
“Change is needed at Emerson Electric”... That's one of the opening slides in the aggressive pitch deck created by hedge fund D.E. Shaw. The firm now owns 1% of Emerson, but is trolling the company to make major adjustments. So it crafted a Burn Book-style slideshow and open letter calling out Emerson's flaws. Lots of them.
- Emerson treated itself to 8 private jets and 1 helicopter so execs don't have to go through TSA.
- It splurges on a staff of 40 to run that aerial fleet — supported by an entire summer internship program.
- There are a whopping 18 Emerson facilities in just the city of Houston alone.
- The fund also got personal, claiming a recent acquisition "destroyed value" and caused "extreme shareholder dissatisfaction."
We’re doing this to help you, not hurt you... The activist hedge fund isn't just hating on Emerson — it wants to “work together to unlock value for all shareholders” (their words). Emerson's stock rose because investors now see the sickness, along with D.E. Shaw's prescription:
- Get frugal (slash annual spending by $1B)
- Keep leadership hungry (force board members to run for re-election every year)