Legendary Activist investor and founder of ValueAct Capital, a $16bn hedge fund, Jeff Ubben (pictured) has left to launch a new environmental and social impact investment company.
Ubben’s departure from ValueAct, founded in 2000, comes after a years-long transfer of power. He handed off the chief investment officer job in 2017 and the chief executive role earlier this year to his handpicked successor, Mason Morfit.
“ValueAct needs to not be ‘Jeff Ubben’s ValueAct’ any more,” Ubben told the Financial Times on Tuesday. “I haven’t put a stock in the main fund in three years . . . That’s a problem for ValueAct, since they should be able to move on from me.”
Ubben is focusing on his new venture – a hedge fund called Inclusive Capital Partners, which he co-founded with Lynn Forester de Rothschild, chief executive of the non-profit group Coalition for Inclusive Capitalism, and two former colleagues from San-Francisco-based ValueAct.
The veteran investor, who has amassed a $400m fortune, sees social impact as the next logical step for activist hedge funds. Known for his friendlier approach to activism which avoids public battles with target companies in most cases he is looking to emulate the approach he used while running ValueAct’s flagship.
“Companies, as governed today, with investors asking for more current returns and more buybacks and so forth, aren’t working for society or nature,” he said. “But I have to prove that there’s a return [in long-term impact], because otherwise . . . you’re not really changing anything.”
Activist investors can still “bully little companies to sell to private equity,” he said, but doing so will only provide modest profits.
“Finance is, like, done. Everybody’s bought everybody else with low-cost debt. Everybody’s maximised their margin. They’ve bought all their shares back . . . There’s nothing there. Every industry has about three players. Elizabeth Warren is right.”
An impact fund and a traditional fund under the same roof at ValueAct can be“confusing” for investors, Mr Ubben said. “I don’t think these two strategies peacefully coexist,” said Mr Ubben. Pushing companies to tackle environmental and social issues, on the other hand, can create big returns, he said.
“When you’re talking about addressing climate change with a business solution, that is the biggest problem in the world. That’s like a 10-times-your-money deal.”