Cliff Robbins helped define 1980s Wall Street. He was considered a barbarian. However, today he has become a friendly activist. Robbins is still very much in things to make money. However, his strategy has changed from KKR’s barbarian company buyouts. In 2004, Robbins founded Blue Harbour Group, a company that is a friendly activist and will not invest unless it is welcomed by another company’s management team.
Robbins describes his approach as private equity activism. His company’s goal remains the same. He is looking to convince management teams to enhance stockholders through spinoffs, stock buybacks, dividends, and more. Some critics believe that Robbin’s type of investing does not consider the long term welfare of a company, but that it only focuses on rewards in the short term for shareholders.
Blue Harbour manages approximately $3.8 billion and has a stake actively in approximately 50 companies. Some of those companies include Chicos FAS Inc., Jack in the Box Inc., Akamai Technologies Inc., and Nabors Industries Ltd. Blue Harbour will usually purchase about 5 to 10 percent of a company. Robbin’s strategy works for investors like sovereign wealth funds, university endowments, and California State Teachers’ Retirement System.
“The number of transactions that Cliff and Blue Harbour have achieved relative to most others is fairly significant, and yet you don’t really see him out there in the headlines,” said Gregg Hymowitz, whose $12 billion Entrust Capital Management invests with Blue Harbour and other activists.
According to Robbins, the biggest mistake that his company Blue Harbour made was not realizing when the right time to sell was. At one point, the company convinced Domino’s Pizza Inc. to pay a large dividend and borrow from its franchisee royalties. Instead of choosing to sell high, Blue Harbour decided to remain invested and ended up losing the majority of what was gained.
Robbins graduated from Stanford Business School and Harvard University. He was working at Morgan Stanley and then joined KKR afterwards as an associate. This transition occurred a little over a year before the bidding war began with Nabisco. Robbins ended up working with Nabisco for years. He served on Nabisco’s board while it was under KKR’s ownership. Robbins met his wife when she worked in the PR department. In 1999 Robbin’s left KKR and joined General Atlantic Partners. Four years after that, he founded his company Blue Harbour.
He was labeled a barbarian by John Helyar and Bryan Burrough, two authors. He insists that the Nabisco acquisition was fair and profitable. Robbins feels that PE taught him that finding open-minded, good management teams is very important. He feels that smart, hard-working managers with a good deal of integrity know how to create value and protect capital when things are not going well.