So a couple of weeks ago an manager of an activist hedge fund manager became the majority stockholder of Banco Popular Inc. (BPOP) a publicly owned bank holding company, based in Puerto Rico. This is usually should not cause much commotion since these things are very common, but this specific hedge fund manager is something to pay attention to. Daniel Loeb, manager of Third Point, LLC is a highly skilled and well- respected investor, most popular for wreaking havoc in the board room with his letter, publicly filed to the SEC expressing his thought about the company. What you see in this letter will leave you jaw dropped (i.e. ‘Since you ascended to your current role of Chief Value Destroyer, the shares have dropped over 45 percent.’; “It was my conclusion that the company’s board is governed by a toothless crew of cronies.”) Daniel Loeb goes into companies and starts slashing heads and cashing checks. So what does this all mean for Banco Popular? This stock has been trading in the mid-$2 range this past month, yet for the past few years, it has been battered, falling from its highs of $28.83 in 2005. It was announced as one of the worst performing stock is the S&P 500 along with AIG and Citi.
So what can Dan Loeb do to help Banco Popular get out of the hole CEO Richard Carrion dug this company into? Do exactly what he has done with many of his investments (i.e. Potlatch Corp.) and embarrass the CEO of the company until he quits. After that, revalue the companies strategies and drop all hopes of expanding outside of the island. This, although may be scary for investors should be a shine of hope for the company, since this guy’s activism has made him and his investors rich. After he is done with the company and sells of all his shares, dump the stock.
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Everyone in power in corporate america decided years ago that the united states could have an economy based on financial services professionals like financial planners credit card companies' insurance agents CPA'S just take a look around the corner of the town you live in and you will find the insurance agents office the financial services company or a financial services company renting space inside a bank selling mutual funds and annuities. What a fake economy indeed. The only problem with this picture is its reversed saving creates financial services businesses. What we have here is an industry that makes its money off of money by charging money to manage money. Instead of creating real jobs that create real wealth we have quite the reverse. And what does everyone see when they think of their children graduating from college. Someone sitting at a desk in some bank in front of a computer.
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