Interest in shareholder activism has been steadily building in Europe for a number of months, with 13 European companies having been publicly targeted by activists in 2014 so far.
The June 2014 issue of Activist Insight points out most activist investors have a different approach than value investors in their research.
The Activist Insight points out that Bill Ackman’s claim in October 2013 that an invasion of U.S. hedge funds was inevitable has merely added fuel to shareholder activism in Europe. Though activism hasn’t yet become commonplace in Europe, there is a sense that momentum is building.
Last year was a banner year for hedge funds in general, as the industry attracted $31 billion worth of net inflows, according to data from HFM. That total included a challenging fourth quarter, in which investors pulled more than $23 billion from hedge funds. HFM reported $12 billion in inflows for the first quarter following Read More
In an editorial, the June issue of Activist Insight notes there are practically no poison pills in Europe, and calling shareholder meetings is comparatively simple. Furthermore, the editorial highlights research suggesting activists drive long-term value is making its way across the Atlantic. It also notes with activism doubling since 2010 and the ‘shareholder spring’ of 2012—centered mainly around remuneration practices but with lasting implications for investor relations—a not too distant memory, issuers’ concerns are growing.
Activist Insight also highlights that while 62% of new campaigns have been at U.S. companies, European companies are also seeing greater activity with 10% of new campaigns emanating at European companies. The following graph captures the trend:
The following graph highlights the mixed success experienced by activist campaigns in 2014 so far:
The editorial points out that 13 European companies have been publicly targeted by activists in 2014 so far, while at 86 companies activists have sought board representation worldwide in 2014.
Event-driven investments lead the way
The Activist Insight also highlights that event-driven investments are leading the way, with Horizon Pharma Inc (NASDAQ:HZNP) and TriQuint Semiconductor (NASDAQ:TQNT) rising fast on the back of mergers. The following table highlights the trend:
Focusing its attention to the best managers to follow, the editorial points out Pershing Square Capital Management has gained headlines for their returns in 2014. However, as highlighted in the table below, Wexford Capital, Cannell Capital, Bandera Partners and Sageview Capital were also strong performers:
The Activist Insight also notes some of the biggest recent shareholder activism campaigns such as Apple Inc. (NASDAQ:AAPL) and eBay Inc (NASDAQ:EBAY) haven’t necessarily seen activists succeed in their objectives. However, as highlighted in the following table, unresolved campaigns can still return improved shareholder value: