Terry Smith accused Unilever of “virtue signal”
2023.01.10 14:36
Terry Smith accused Unilever of “virtue signal”
By Tiffany Smith
Budrigannews.com – Terry Smith, a British fund manager, said that Unilever (NYSE:) in his most recent attack on the consumer goods giant on Tuesday of “virtue signaling” with its ethically focused marketing.
In his annual letter to investors, Smith, whose Fundsmith vehicle is Unilever’s 15th largest shareholder, also stated that the maker of Hellmann’s mayonnaise and Dove soap had for years ignored his fund’s recommendations regarding the need to improve performance.
However, Nelson Peltz, an activist investor, had recently joined the company’s board of directors.
Peltz, who co-founded the investment firm Trian Partners, is known for transforming corporate C-suites and has served on the boards of Mondelez International Inc., the maker of Ritz crackers (NASDAQ:). and the ketchup manufacturer Heinz, which is now Kraft Heinz (NASDAQ:). Co. “Based on our experience, we typically get ignored,” Smith wrote, “whereas an activist who has held shares for fewer months than we have held for years gets invited to board meetings.”
“I would guess that they held it for far fewer months than we have held it in terms of years,” Mr. Peltz said. “I don’t know how long Trian held its stake before Mr. Peltz was invited to join the board or how big that stake was.”
However, Smith stated that he did not desire a seat on the board and had “no objection to Mr Peltz’s involvement.”
Unilever’s 61 billion pound ($50 billion) bid for GSK’s consumer health assets was criticized by Smith last year, and he urged management to concentrate on boosting performance.
Additionally, he criticized Unilever’s purpose-driven marketing, stating that the company had “clearly lost the plot” and felt it “must define the purpose of Hellmann’s mayonnaise.”
“We don’t know how well it (Hellmann’s) would have grown without the (virtue signaling) ‘purpose’,” Smith stated once more on Tuesday, adding that “maybe Hellmann’s would be growing as fast or even faster without its ‘purpose’.” In Smith’s letter, the word “virtue signaling” was struck through.
Unilever, who did not respond, states on its website that its 400 brands, which include Sunsilk shampoo and Magnum ice cream, “are on a global mission to do good.” In the case of Hellmann’s, many support social or environmental causes, like recycling plastics.
Smith also said that Unilever didn’t tell the truth about small acquisitions.
Before Unilever and its management are permitted to make any more acquisitions, shouldn’t we be aware of their performance? The low return on capital of Unilever may provide a clue.”
