New breed of shareholders, he is not the first, an
https://www.businessweek.com/articles/2012-12-20/ryan-morris-28-year-old-activist-investor
Ryan Morris, 28-Year-Old Activist Investor
Ryan Morris spent a week steeling himself for the showdown. Then 27 years old, he was in his first campaign as an activist investor, trying to wrest control of a small company named InfuSystem (INFU), which provides and services pumps used in chemotherapy. In the meeting, Morris would confront InfuSystem’s chairman and vice chairman, two men in their 40s, and tell them that as a shareholder, he thought the company was heading in the wrong direction.
Morris is competitive—his high school rowing teammates nicknamed him “Cyborg,” and he took a semester off college to race as a semi-pro cyclist—but face-to-face confrontation wasn’t something he relished. “I like the thrill of the hunt, but not the kill,” he says. To prepare, Morris outlined questions, guessed potential responses, and tried to anticipate what tense “pregnant moments” could arrive. He built his clout by lining up support from InfuSystem’s largest shareholder as well as a veteran activist investor. Morris knew his own looks—he resembles a sandy-haired Mitt Romney—could help mask his youth, and decided he’d wear a tie, much as he hates to.
The company, with just $47 million in revenue, was spending too much money, and in the wrong places. In the previous year, InfuSystem’s board and CEO earned more than $11 million combined. This was for a company whose stock had lost 40 percent of its value over the previous three years. Morris figured that as a shareholder voice on the board, he could help cut expenses—including the high pay—and, once it was clean enough to sell, reap a return for his own small hedge fund.
On Dec. 13, 2011, he finally sat at a conference table across from the two directors. After 45 minutes of discussion, he still didn’t think his concerns were being acknowledged. So he got to the point: He wanted three board seats.
When an activist investor like Carl Icahn tries to take over a household brand, it plays out on CNBC. Most shareholder struggles occur when little-known investment funds try to take over little-known companies like InfuSystem. Of the more than two dozen activist battles in 2012, most involved companies with a market value under $50 million. In the smallest face-off this year, Georgetown Law student Daniel Rudewicz, 29, tried and failed to gain control of a $2.2 million company that makes microwave filters.
Many of the fights are being waged by a younger generation of activists, according to Ron Berenblat, Morris’s attorney at Olshan Frome Wolosky. Among the firm’s clients is a 24-year-old about to start his first activist campaign, trying to take over a technology company. Morris’s experience, says Berenblat, puts him “on the new forefront of 30-and-younger activist investors who are ?intelligent, patient, and highly methodical.” After the financial crisis exhausted even the most seasoned investors, young activists like Morris are bringing new energy to the hunt, shining light into dark corners of the market that are often overlooked.
Growing up in Toronto, Morris dreamed of becoming a nuclear physicist, obsessed with the idea that nuclear fusion could create infinite, clean energy—that was, until his father let him in on some bad news. “Even if you become the best scientist in the world, you will not make fusion happen,” Ryan recalls him warning. “If you want to make something happen, you need to be in charge of capital. It’s the resource allocation that gets things done.”
Morris started reading Warren Buffett’s Berkshire Hathaway (BRK/A) shareholder letters. To the 12-year-old Morris, it seemed so easy: With hard work and a clear mind, an independent thinker could spot an undervalued company, buy it cheap, and hold on until other investors recognize the company’s true worth. “Something where you can do well while being a loner was kind of appealing,” he says.
Using money from a summer job laying lawn sprinklers, Morris soon bought his first stock, a company that made fuel cells. He kept investing when he moved to upstate New York to study operations research at Cornell University and later as he extended his undergraduate degree into a master’s in engineering. Alongside classes and cycling, Morris worked with fellow student Paul George to found a profitable company called VideoNote that made it easy for Cornell to stream lectures online. As graduation loomed, Morris decided he didn’t want to take a job on Wall Street, where he could earn millions in the algorithm-driven world of quantitative finance. The financial models that drive the market’s split-second trades were “dumb” in Morris’s eyes, George says. “His whole position is take long-term positions on companies and don’t try to trade on noise. You can’t predict anything.”