Wolves of wall street: ConAgra inflitrated by activist investors


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Phil Brown

Last year, Nebraskans around the state were dismayed with the news that ConAgra, an Omaha institution for nearly a century, would be absconding from the city, with the company headquarters and thousands of jobs, in search of cheaper business. The news came as a slap in the face after the city had bent over backwards to accommodate the company, demolishing an entire historic district and replacing it with an ugly, suburban-style, space-squandering corporate headquarters. Why the betrayal?

ConAgra had been infiltrated by a particularly noisome pest in the world of big business: the activist investor. Perhaps more aptly called “vulture funds,” these parasites buy a significant share in a company in order to force the board to make drastic changes to the company’s direction. The funds care nothing for the jobs they control, they simply want to do whatever it takes to inflate the company’s stock price to turn a profit, even if it costs hardworking families their livelihoods.

In the case of ConAgra, the vultures at Jana Partners quickly forced the company’s exodus to Chicago after gaining control last year, leaving workers in Omaha floundering in their wake.

Now, it seems recent history is repeating itself. The activist fund Elliott Management announced their infection of storied Nebraska company Cabela’s nearly a year ago, and have increased pressure on the company until last week, when the company’s sale was finally announced. The sporting-goods store chain, founded in Nebraska in 1961, will be sold to their rival Bass Pro Shops for $5.5 billion.

It seems certain that this will result in the loss of many Nebraskan jobs. Especially concerning the plight of Sidney, Nebraska, where the company is currently headquartered and where their 2,000 employees make up around 30 percent of the town’s entire population.

Bass Pro Shops would likely eliminate most of the operations in Sidney, especially the ones that would be duplicated by their own head-quarters in Missouri. This acquisition seems poised to turn Sidney into a ghost town and it threatens the jobs of Nebraskans in Lincoln, where a significant amount of work is done in the company’s credit card division, as well as jobs at the Kearney retail location and the La Vista retail store in the Omaha metro. These changes won’t happen until next year, but they are likely inevitable.

Another Wall Street scavenger has been allowed to sabotage a Nebraskan corporation and threaten the jobs of Nebraskans across the state for short-term profit, and this just a year removed from the ConAgra debacle. There’s no reason to suspect Wall Street will suddenly begin to care about working Nebraskans: any publicly traded company the New York financiers see as vulnerable will continue to
be fair game.

Who’s next? Union Pacific? Mutual of Omaha? Peter Kiewit? At 86, Warren Buffett isn’t getting any younger, and his Berkshire Hathaway would be a tasty morsel for the wolves of Wall Street if it showed the slightest sign of weakness.

Handwringing won’t help. Nebraska should take action to defend its working citizens from Wall Street adventurers. One measure to preemptively guard against similar moves would be a corporate exit tax. Such a tax would penalize companies that try to smuggle jobs and resources over state lines, and the tax revenue could be funnelled back into the Nebraska economy by the state.

Another way to curb the influence of activist vultures would be for government agencies to specifically regulate their activity. Currently, the U.S. Securities and Exchange Commision doesn’t acknowledge activist investors as a problem, and won’t regulate them as such.

Either they must introduce new regulations targeting activist in-vestors, or state authorities, like Nebraska’s Department of Banking and Finance, must beef up minority shareholder protection. Regardless, action should be taken immediately to prevent more Wall Street thievery of Nebraskan jobs and resources in the years to come.


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