What The Sell-Side Thought Of Bill Ackman's ADP Thesis Presentation

Billionaire activist investor Bill Ackman made his activist case against Automatic Data Processing ADP public last week, which was well researched and "reflected significant efforts at due diligence," analysts at Baird Equity Research commented in a research report.

Ackman and his team did present a series of opportunities for ADP in which the company can boost revenue and gain market share while simultaneously improving its profitability, Baird's Mark Marcon commented in a research report. The presentation also factually pointed out that in its current form ADP is indeed losing market share and needs to improve its competitiveness within the Enterprise space.

In fact, many of the points made during the presentation are ones which ADP's management are "well aware of" and have been addressing areas of weakness over the past six years, Marcon continued. However, many of Ackman's ideas for change aren't necessarily feasible in the timeline suggested.

Ackman's presentation may have also suggested that ADP would be in a better position under a different management team, the analyst added. As such, a vote for Ackman's slate of directors to the company's board would be seen as a vote against the current management. As such, many long-term shareholders may feel "anxious" to vote against the current management team after six years of outperformance.

"In our opinion, making transformational changes when paying one out of every six private sector employees is challenging ... particularly when trying to maintain client retention and employee engagement," Marcon wrote.

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