NEW YORK (TheStreet) -- In an op-ed published this week by the Wall Street Journal, Yale School of Management's Jeffrey Sonnenfeld made some criticisms of activist investors that didn't sit well with many fund managers.
In particular, Nelson Peltz, founder and CEO of Trian Partners, is taking issue with some of Sonnenfeld's claims. Peltz argues that activist investors aren't the only winners when they find a company that they feel could execute better.
By buying into a company and pushing its management and its board to improve, activism benefits all shareholders, he reasoned. He also pointed out that he tends to stick with many of his stocks for a long period of time, rather than just a few months.
As for performance, there has been discrepancy as to whether activists outperform the market. While the average hedge fund generally underperforms the broader market, activist-led funds tend to be among the best-performing in the hedge fund community.
Since its inception in 2005, Peltz says his fund has generated returns of 137%, which tops the S&P 500
Peltz says Trian Partners attempts to build, fix and run companies for the longer term, which is a benefit to both the company and its shareholders.
While the average activist investor might not beat index returns, investors like Peltz and Carl Icahn aren't "average," they're far better, said Josh Brown, CEO and co-founder of Ritholtz Wealth Management. Activists are needed to push performance and bring about change, he added.
As for the broader market, Brown pointed out that earnings estimates for the first quarter have not been positive. However, the subdued expectations could pave the way for many companies to beat expectations. It's also a promising sign that the earnings drag is being blamed on currency woes and not a slowdown in business.
If investors exclude the earnings fallout from energy, earnings growth for the S&P 500 is actually projected to be positive, according to Dan Greenhaus, chief strategist at BTIG. In regards to stocks, the non-farm payrolls report for the month of March is less important than the upcoming earnings results.
As for first quarter GDP, Greenhaus reasoned that most first quarter results for the past several years have been underwhelming, as weather slows business and in the case of 2015, with the dollar rallying so much.
Paul Richards, head of FX, rates and credit distribution North America at UBS, had a different take, saying Friday's employment report will be key in how the Federal Reserve handles its interest rate policy. If the Labor Department report shows 300,000 or more jobs were added in the past month, it could lead to a rate hike as early as June, he suggests. If that pace of job growth continues, another rate hike in October and possibly even a third in December could also be in the cards.
Investors are not ready for a hike, which is why a good labor report could push stocks lower, Richards concluded.
While Richards believes there could as many as three rate hikes this year, Michael Block, chief strategist at Rhino Trading Partners, says there's a good chance the Fed won't hike rates at all in 2015. However, if the market does pull back in anticipation of a Fed hike, he's a buyer.
So far, equities, bonds and oil prices have remained rangebound, according to Pete Najarian, co-founder of optionmonster.com and trademonster.com. He suggested that investors continue to sell rallies and buy dips in these assets until it either breaks out or breaks down.
For now, pullbacks in stocks have been relatively muted and drops of only 3% to 4% have given investors a buying opportunity, said Jon Najarian, co-founder of optionmonster.com and trademonster.com. He feels good about the U.S. economy, but says bond yields are headed lower as global central banks continue to buy sovereign debt, making U.S. Treasuries more attractive.