Keith Meister has risen to become one of the most feared and revered activist investors on Wall Street. Having mastered his trade as a right-hand man of billionaire and activist investor Carl Icahn, he started his hedge fund Corvex Capital in 2011 with the help of $250 million from George Soros.
As an activist investor, he always looks for highly undervalued stocks that can generate significant value through activism. The strategy entails pushing for company management changes or asset sales to unlock underlying value. In some cases, the activist investor calls for the sale of the business or divestments of some units.
Meister's style of activism has earned him a legion of fans and critics in the financial media and corporate boards. nevertheless, he is also a respected activist investor in the fund community because of the value he always generates from his plays.
Some of Meister's activist targets have included CenturyLink, where he pushed for a management shakeup with the appointment of new CEO. He also partnered with old pal Icahn to make for a sale of Energen Corporation to unlock shareholder value.
Nevertheless, Corvex Capital is a fundamentally driven hedge fund that only uses activism as a last-resort tool. Meister has always strived to avoid activism or proxy fights and often prefers to be amicably invited into boards. His engagement with MDU Resources is a perfect example of how activism can sometimes take a back seat and still unlock strategic moves that involve asset sales or spinoffs.
In the most recent past, Meister has scooped up shares in tech giants Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) to benefit from the artificial intelligence boom. After acquiring a 13.1 million stake in Amazon stock, the e-commerce giant surged by 23%, generating significant returns for the activist investor. Meister has also invested in Endeavor Group Holdings, Inc. (NYSE:EDR) and Uber Technologies, Inc. (NYSE:UBER) as part of its diversification strategy.
While Meister has been posting solid returns over the years, the assets under management in the activist hedge fund have declined. Assets have wavered from a peak of $9.1 billion in 2015 to about $1.8 billion in the second quarter of 2023. Over the past three years, Meister has delivered an average of 2.70% annualized return with a gain of 30.7% since 2013.
Our Methodology
Meister is one of the most respected activist investors given his success in acquiring stakes in companies and pushing for drastic changes aimed at unlocking value. With a gain of over 30% since 2013, Meister is always looked upon when it comes to stock activism. We have compiled a list of some of Meister's biggest Stock activism plays on wall street and the returns his actions generated. We have ranked the stocks based on the activist investment SEC filings.
Long Term Returns: 54.41% S&P 500 Returns: 7.99%
Activist Investment: 2011
AboveNet provided high-bandwidth telecommunication circuits for large corporate enterprises and communication carriers. Activist investor Meister confirmed a 6.7% stake in the company in 2011 and reiterated that it was highly undervalued despite its strong competitive position, loyal customer base, and robust cash flow.
As part of his activism in the company, Meister pushed for a merger of AboveNet with Zayo Group Holdings as one of the ways of unlocking value. He expected the merger to create synergies and help the combined company enjoy scale advantages in the connectivity industry.
In 2012 a deal was struck that saw AboveNet acquired by Zayo Group for $2.2 billion, representing a 13% premium. Meister is believed to have made a $100 million profit from the transaction just as his activist investor hedge fund was starting.
Long Term Returns: 25.97% S&P 500 Returns: 17.61%
Activist Investment: 2012
Ralcorp Holdings, Inc. (NYSE:RAH) manufactures food products, including breakfast cereal, cookies, crackers, and chocolate snack foods. Before ConAgra Foods's acquisition in 2012 for $90 a share, it was one of the hottest prospects on Wall Street.
Meister took a 5.1% stake in the company in 2012 and alleged that the company suffered from poor governance and misaligned incentives. The activist investor also embarked on a proxy fight, insisting it was a wrong move to spin off the company's Post cereal business.
The activist investor had suggested the company put itself up for sale or line up some serious acquisitions as one of the ways of reinvigorating its prospects and generating shareholder value. Following his appointment to the board, Meister pushed for a merger between the company and ConAgra Foods, insisting it would create synergies and scale advantages in the food industry.
In November, a $6.8 billion deal was struck that saw ConAgra acquire Ralcorp Holdings, Inc. (NYSE:RAH), and was completed in January. Meister allegedly made a profit of $300 million from the deal.
Long Term Returns: 6.85% S&P 500 Returns: 31.57%
Activist Investment: 2012
ADT Inc. (NYSE:ADT) provided electronic security interactive home and business automation. It also offered alarm monitoring services. Meister disclosed a 5.02% stake in the company in 2012. At the time, the activist investor believed the company was fundamentally undervalued and ought to have taken advantage of the low-interest rates to acquire 45% of outstanding shares.
Meister worked his way into the company's board and pushed for stock buybacks as one of the ways of unlocking shareholder value. The activist investor had also criticized the company's conservative approach to debt, calling its capital structure indefensible.
Nevertheless, barely a year later, Corvex Capital sold off most of its ADT Inc. (NYSE:ADT) holdings for about $450 million and walked away with a remarkable 20% return on its investment. ADT agreed to be acquired by an affiliate of certain funds managed by Apollo Global Management for $42 a share in 2016 for $6.9 billion.
Long Term Returns: -23.44% S&P 500 Returns: 53.11%
Activist Investment: 2013
CoreCivic, Inc. (NYSE:CXW), the new name of Corrections Corp of America, is the leading provider of high-quality services for corrections and detention management in the nation. The company works with state and federal criminal justice systems to supervise individuals in states of incarceration.
Activist Investor Meister declared a 9.9% stake in the company in 2013 and expressed plans to engage the board and management to explore ways to unlock underlying value. Following the investment, the hedge fund, in partnership with Marcato Capital Management, tried to convince management to convert the company into a real estate investment trust for tax purposes.
Meister also pushed for a merger with GEO Group, another private prison that had successfully converted into a REIT. The merger was expected to create synergies and scale advantages. The company budged under pressure and confirmed in September 2013 that it would convert into a REIT and start paying a special dividend.
Meister saw his activism pay off as CCA increased its quarterly dividend by 6% to $0.54 a share in 2014, affirming booming businesses under the REIT structure. In 2016 the company changed its name to CoreCivic, Inc. (NYSE:CXW) to reflect its diversified range of services.
Long Term Returns: 64.04% S&P 500 Returns: 30.74%
Activist Investment: 2013
CommonWealth REIT was a real estate investment trust that owned and operated office buildings across the United States. Meister disclosed a 6.3% stake in the REIT in 2013, making his first activist play in the real estate sector. At the time of the investment, the activist investor believed the company had a substantial property portfolio but was undervalued and suffered from poor governance.
Meister waged a proxy battle, first criticizing a plan to issue 27 million shares of new stock to raise $450 million to retire some of the company's debt. He insisted that such a move would only dilute existing shareholders and lower net asset value.
Meister and Related Cos merged to push for a deal to acquire the company for $25 a share, which they said was a superior offer. The two activist investors also launched a proxy fight to remove the entire board, insisting they were not independent and had failed to act in the best interest of shareholders. In 2014 they got their wish as shareholders voted to remove the entire board and elect a new slate of directors.
In 2014 Meister engineered a sale of the company to Equity Commonwealth, another REIT, for $2.6 billion or $26 a share, with Meister ending up with a profit of $300 million from his investment in the company.
Long term Returns: 56.58% S&P 500 Returns: 32.54%
Activist Investment: 2013
Headquartered in Littleton, Colorado, TW Telecom Inc (NASDAQ:TWTC) was a business telecommunication company. It has since evolved to become a leader in delivering hybrid networking cloud connectivity and security. Activist investor Meister first acquired a 6% stake in the company in 2013 and intends to engage the board and management on various strategic initiatives to unlock value.
Backed by a loyal customer base, robust cash flow, and strong competitive position, the activist investor believes TW Telecom Inc (NASDAQ:TWTC) was highly undervalued and termed it a prime acquisition target. Therefore he pushed for a share buyback program to return value to shareholders while also pushing for a potential merger with other telecom providers.
In 2014 Meister pushed for the acquisition of TW Telecom Inc (NASDAQ:TWTC) by Level 3 in a deal that valued the company at $5.7 billion. He made a profit of about $400 million from his investment.
Long Term Returns: -23.58% S&P 500 Returns: -1.03%
Activist Investment: 2014
Signet Jewelers Limited (NYSE:SIG) is one of the world's largest retailers of diamond jewelry, with brands in the US and Canada. Through Corvex Management, Meister acquired a 6.26 million share of the specialty retailer in 2014 for a 7.8% stake. The acquisition came amid a strong belief that the stock was undervalued and offered an attractive investment on the upside.
The hedge fund engaged the management on various strategic alternatives, including leveraging credit receivables, optimizing capital structure, and accelerating mergers and acquisitions to unlock value.
In 2017, Signet Jewelers Limited (NYSE:SIG) reached a deal to acquire R2Net, owner of JamesAllen.com, for $328 million as it sought to accelerate its customer-first omnichannel strategy.
Long Term Returns: 12.67% S&P 500 Returns: 10.79%
Activist Investment: 2014
Fidelity National Financial, Inc. (NYSE:FNF) is an insurance company that provides various insurance products across the United States. It offers title insurance, escrow, and other title-related services, including trust activities, trustee sales guarantees, recordings and conveyances, and home warranty products.
Fidelity National Financial, Inc. (NYSE:FNF) was targeted by activist investor Meister in 2014 as he acquired a 7.6% stake and started pushing for its sale or spinoff of non-core business. The activist investor got seats on the board and helped push for the sale of the company stake in Remy International, an auto parts manufacturer, to BorgWarner for $1.2 billion. The deal helped reduce the company's debt and improve efficiency in the remaining businesses.
With the blessing of Activist Investor, Meister Fidelity National Financial, Inc. (NYSE:FNF) reached an agreement to spin off its majority-owned subsidiary Black Night Financial, into a publicly traded company. In 2018 Meister pushed for acquiring rival title insurance company Stewart Information Services Corp for $1.2 billion as the Activist Investor insisted it would help create shareholder value.
Long Term Returns: 384.52% S&P 500 Returns: 109.34%
Activist Investment: 2014
American Reality Capital Properties (ARCP) was a real estate investment trust that owned and operated single-tenant commercial properties across the US. In 2014, activist investor Meister confirmed a 7.1% stake in the company. He waged a proxy battle inside the company, believing that the company, with its loyal tenant base, was in a position to pay a strong dividend yield. The proxy war sought to address the company's accounting challenges and management turnover.
Meister also pushed for the REIT to partner with a more giant REIT or private equity firm to provide core resources stability and credibility. Some potential buyers that Meister eyed included Blackstone Group, Starwood Capital Group, and Realty Income Corp.
In 2015 ARCP reached a deal to sell its Cole Capital business for $700 million with the blessing of the activist investor. In 2016 the REIT changed its name to Vereit Inc (NYSE:VER) and focused on portfolio diversification, balance sheet improvement, and operational excellence. The activist investor approved the changes.
Long term Returns: 39.13% S&P 500 Returns: 21.45%
Activist Investment: 2016
Pandora Media Inc (NYSE:P) is a music streaming company that offers personalized playlists. It also operates as an internet radio company. In 2016 activist investor Meister confirmed a 9.9% stake in the company as he sought to push for the sale of the company to unlock value.
With the massive stakes in Pandora Media Inc (NYSE:P), he got the right to nominate four candidates for the board. Being part of the management team, he believed the company was better off merging with a larger media or technology company to compete better against Spotify, Apple Music, and Amazon Music.
In 2017 he engineered a sale of a 19% stake in the company to Sirius XM for $480 million and received an additional $200 million. In 2019, Sirius XM Holdings Inc. (NASDAQ:SIRI) acquired the company for $3.5 billion or $10.14 a share, creating one of the largest audio entertainment companies with over 100 million listeners.
Long Term Returns: -51.15% S&P 500 Returns: 10.79%
Activist Investment: 2016
The Williams Companies, Inc. (NYSE:WMB) is an energy infrastructure company that operates through Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services segments. As a natural gas pipeline operator, it is engaged in the processing and transporting of natural gas and natural gas liquids in the US.
Meister confirmed a 10% stake in the company in 2016 but was forced to resign from the board in June after questioning the abilities of CEO Alan Armstrong and failing on an ouster motion. He suggested ten new directors for the board that will act as placeholders until the company selects the best permanent directors.
The proxy battle between the hedge fund manager and the energy infrastructure company ensued when The Williams Companies, Inc. (NYSE:WMB) was an acquisition target of pipeline competitor Enterprise Products Partners. Meister insisted that the company was better off partnering with a larger energy company or a private equity firm to address various challenges, from regulatory scrutiny to litigation risk and shareholder lawsuits.
In 2017, The Williams Companies, Inc. (NYSE:WMB) budged under pressure from the activist investor and agreed to add three new independent directors, two nominated by Meister. In 2018, the company acquired all outstanding units of Williams Partners, its limited partnership subsidiary, for $10.5 billion. It also agreed to sell certain assets in the Four Corners area to Harvest Mainstream for $1.125 billion as part of a push to unlock value.
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Disclosure: None. Long-Term Returns of Keith Meister's Activist Targets is originally published on Insider Monkey.
