Wednesday, April 30, 2008

Temple-Inland: yesterday and today

Temple-Inland, a manufacturer of corrugated packaging, will hold its annual meeting this Friday.

No fireworks are expected. This might be a good time, though, to reflect on the long-range effects of stockholder activism of the Icahn sort. For it was little more than a year ago that Carl Icahn was making a lot of noise about this company, with a plan to divide it into three parts, etc. Here's a news story from that era.

Before Icahn started talking up a proxy contest, Temple-Inland's stock was worth a price in the low 60s range. His interest helped push the price up to close to $80. After his Emily Latella "never mind" announcement, the price fell to $73.45.

Also at that time, an analyst for Banc of America said that the price was unlikely to return to the pre-Icahn range. Since then, the company has spun off two of its units -- a finance operation and a real-estate concern. What is left is worth $11.74 per share. And no, that isn't just because of the spin-offs. The three parts together aren't worth the pre-Icahn whole.

This would suggest that there is truth to a classic indictment of hedge funds and greenmailers: that they produce a short upward boost in price but that their activity is bad for a business as an ongoing concern.

Too small a data base, of course, but hey ... I'm a blogger, not a guru.

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