Elliott's Jesse Cohn defends active investors for market health

2 hours ago7 min read3 comments

Jesse Cohn of Elliott Investment Management mounted a vigorous defense of active investing at Axios' BFD event this Tuesday, positioning his firm's aggressive stance not as corporate raiding but as essential market stewardship. Speaking with Dan Primack, Cohn articulated a fundamental concern: the creeping dominance of passive investment strategies is creating a corporate governance vacuum where management teams face little accountability.'The whole premise of our markets were built on the backs of active investors, people actually choosing which companies deserve capital,' Cohn asserted, framing Elliott's activism as a return to first principles rather than financial engineering. His warning carried the weight of experience: 'We can't have a situation where passive investors who are not choosing companies, who are not holding management accountable, who are not leading to market dynamism, control the votes at our largest US companies.' The implications, he suggested, extend far beyond boardroom politics: 'We just cannot have that. It's not healthy for us.It's not good for our economy. It's not good for our savers.It's not good for anybody with money in the market. ' This philosophical stance underpins Elliott's notoriously hands-on approach, which has seen the $76.1 billion asset manager expand its playbook beyond traditional shareholder letters into unconventional territory like podcasting—a medium it weaponized last year to publicly pressure Southwest Airlines executives. The firm's campaign against Phillips 66 exemplifies its relentless methodology, though it recently drew accusations of conflict of interest when the oil refiner claimed Elliott was simultaneously bidding on a competitor while pushing for divestiture of its midstream business.Yet the market often validates Elliott's thesis, as demonstrated by its recent $4 billion stake in PepsiCo. The activist's proposal for the beverage giant to methodically deconstruct itself—potentially offloading brands like Sodastream and Cap'n Crunch—sent PepsiCo stock soaring upon announcement, suggesting investors see merit in the surgical approach.This isn't merely about short-term gains; it reflects a deeper conviction that corporate America suffers from conglomerate bloat and requires disciplined capital allocation that passive funds, by their nature, cannot enforce. The tension Cohn describes mirrors historical debates about shareholder democracy, echoing concerns raised by figures like Warren Buffett about the unintended consequences of index fund dominance.As passive strategies continue capturing trillions in assets, the question becomes whether Elliott's brand of activism represents the necessary counterbalance or merely one extreme in an increasingly polarized financial ecosystem. What remains clear is that for Cohn and his colleagues, active stewardship isn't just a business model—it's a moral imperative for market health.

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