Can activist investing be impact investing? A look at Apple.

by Evelyn Donatelli

Over the past few decades, activist investors (ex: Peltz, Icahn, Ackman) have occasionally become stereotyped as power-hungry bullies who leverage their investments (typically 0.5-5% of a public company) to force their agenda on company executives at the expense of the company’s autonomy. But could this be used for good?

Apple’s ($AAPL) recent confrontation with 2 activist investors, suggests so. An unlikely pair on first look, NY-based hedge-fund JANA Partners LLC, and the California State Teachers’ Retirement System (CalSTRS) pension fund together own a combined $2B position of AAPL shares. In an open letter, the two activists urge Apple to deal with the “growing health crisis” Apple is currently enabling, and that the company has a responsibility to help parents limit phone use through developing new software tools, and to actively investigate the impact of excessive phone usage on mental health.

Though Jana and Calstrs own a small 0.2% of AAPL’s $900B market capitalization, an activist using his/her position to enforce social impact initiatives is noteworthy, and speaks to the improved support impact investing is receiving, at least publically, from investors and banks.  However, JANA and CalSTRS’ virtuous approach to investing is offset by investors like Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management. Gerber says simply “We invest in things that are addictive…Addictive things are very profitable.” Gerber also owns shares of Starbucks, MGM Resorts International, and alcohol-maker Constellation Brands Inc.