September 24, 2018

Activism: Crystal-Balling the Next 12 Months

What can companies expect from activists over the next 12 months?  This ValueWalk article reviews the landscape, and says that although there are plenty of ways that activism could tail off, you probably shouldn’t count on it:

Bankers said 2018’s proxy season was one of the busiest they could remember, despite the absence of some of the biggest activists from annual meeting ballots. A big ending to 2018 would look a lot like the first eight months of the year, Morgan Stanley’s David Rosewater said in an interview, adding that while the pace of proxy fights is situation-specific, the general pace of activism is being driven as much by first-time or occasional activists as the professionals.

Even so, Trian Partners and Pershing Square Capital Management have each indicated they have new undisclosed positions. Advisers are coiled ready for Third Point Partners’ next move at Campbell Soup. United Technologies has received clear signals that the result of its strategic review should be a breakup; the consequences if it does not are hazy.

After a period when it felt as though activists were struggling to digest big projects and the gaps between proxy fights lengthened, the next 12 months look like a time for opportunism. Bankers expect plenty of activity even if markets fall and allocators continue to steadily withdraw from hedge funds, citing the ability of activists to raise special purpose vehicles for one-off campaigns. One banker said that even companies well-prepared for activists had to consider the knock-on effects if they attempted to make acquisitions or raise capital just to keep up with the strategies.

And if the S&P 500 Index continues to rise, activists will simply go overseas.

John Jenkins