Ralph Nader, investor

Larry Ribstein —  24 June 2011

So how is Ralph Nader, the former scourge of GM and all things corporate, doing with his retirement fund?  The WSJ takes a peak:

In 2000, his Cisco stake was valued at $1 million, about one-third of his $3 million portfolio. As Cisco’s share price swooned in the years that followed, it has represented a smaller slice of his overall investment portfolio, which he said still is valued at about $3 million. At Thursday’s closing price, his stake is valued at $278,460.

I guess Nader is learning about diversification the hard way.

Like Frank Easterbrook, Michael Jensen and Mike Milken, among others, Nader seems to understand the agency costs of cash retention:

In a private letter to Cisco Chief Executive John Chambers sent June 13, Mr. Nader blasted the CEO for not doing enough to lift shares of the technology company and said “it is time for a long overdue Cisco shareholder revolt against a management that is oblivious to building or even maintaining shareholder value,” according to the letter. * * * Among the specific actions Mr. Nader suggested in the letter are the distribution of a one-time dividend of $1 a share and an increase in Cisco’s annual dividend to 50 cents from 24 cents. “If they can’t give shareholders value, then they have to give cash,” Mr. Nader said in an interview this week. . .

Nader does have cause for complaint:

Cisco’s shares  * * * are down nearly a third in the past year and are off 75% from their all-time, tech-bubble high. * * * Cisco, like many big tech companies, has been accumulating cash despite its weak growth. It holds $43 billion in cash, nearly half of its market value.

So Cisco is basically a very expensive money market fund.  Or possibly tax shelter, since it says most of the cash is “foreign earnings, which would be subject to taxes if the funds were brought back to the U.S.”

Nader says he’s an “adversary of corporate capitalism” but a “believer in capitalism.” True to form, Nader is thinking about organizing a shareholder revolt. 

But corporate accountability measures don’t necessarily work with cash cows that resist reform.  Nader seems to recognize this in trying to enlist hedge funder Carl Icahn to his cause. 

Yes, what Nader really wants is an uncorporation.

Larry Ribstein


Professor of Law, University of Illinois College of Law