Companies Interested, Poor Market Prices

In the last 36 years practically nothing has actually been accomplished through intelligent action by the great body of shareholders. A sensible crusader-if there are any such-would take this as a sign that he has been wasting his time, and that he had better give up the fight. As it happens our cause has not been lost; it has been rescued by an extraneous development-known as takeovers, or take over bids.* We said in Chapter 8 that poor manage

• Ironically, takeovers began drying up shortly after Graham’s last revised

edition appeared, and the 1970s and early 1980s marked the absolute low point of modern American industrial efficiency. Cars were “lemons,” televisions and radios were constantly “on the fritz,” and the managers of many publicly traded companies ignored both the present interests of their outside shareholders and the future prospects of their own businesses. All ofments produce poor market prices. The low market prices, in turn, attract the attention of companies interested in diversifying their operations-and these are now legion. Innumerable such acquisitions have been accomplished by agreement with the existing managements, or else by accumulation of shares in the market and by offers made over the head of those in control. The price bid has usually been within the range of the value of the enterprise under reasonably competent management. Hence, in many cases, the inert public shareholder has been bailed out by the actions of “outsiders”-who at times may be enterprising individuals or groups acting on their own.