More and more U.S.-based investors are starting to look across the border for activist opportunities, although it might not seem like it. However, Activist Insight reports that the reason it might not appear as if activism remains at the high level it has been at since 2008 is because much of the action has moved behind closed doors.

Why activists like Canada

Wes Hall, CEO and founder of Kingsdale Shareholder Services told Activist Insight in an interview that one of the reasons Canada looks like an activist investor’s dream is because the warning threshold for investors is 10% ownership. Also it’s easier to move on companies because of the Toronto Stock Exchange’s majority voting policies.

Activist Investing Moves Behind The Scenes In Canada: Wes Hall

However, Hall says the main attraction is the opportunities in Canada. He notes that the U.S. market keeps getting more and more crowded. As a result, he says many of the players “are getting elbowed out as what remains of the low-hanging fruit is picked off.” They then turn to Canada for companies that make attractive targets for an activist campaign.

The Canadian dollar is weaker than the U.S. dollar, so smaller investors can buy up bigger stakes in a Canadian company than they can often do in a U.S.-based company.

Activists operate in secret

According to Hall, the number of proxy battles in Canada climbed 67% from 2007 to 2008 and has remained at that high level since then. However, this year there are many fewer battles that are publicly disclosed, as activists move their work behind closed doors.

“Activists have become more sophisticated arriving at boardroom doors with white papers and alternative corporate strategies, and boards, acknowledging the high resource costs of a fight, are more willing to listen,” Hall said.

He added that activists are “doing a better job” of bringing up issues that definitely need fixing, and boards have been “willing to accept their point of view and make changes before a fight.” In addition, he said that even when activists are not successful in getting what they ultimately want, they often win anyway because they influence the board to “go off in a different, more profitable direction.”

The full interview with Hall is in Activist Monthly‘s October issue ( ValueWalk readers can receive 33% discount on  Activism Monthly Premium by using this link to purchase a subscription)…