BlackRock and the Florida State Board each backed ten activist campaigns in 2014
BlackRock posted strong earnings in January, beating estimates as the amount of its assets under management approaches $4.7 trillion. Clearly the firm’s strategies are paying off, and one of those trends apparently involves keeping an eye on what activist investors are doing and then simply supporting them.
Activist investors rely heavily on the support of institutional investors, particularly in the case of proxy contests because a least a majority of shareholders must support their demands. Looking at data from Proxy Insight, the folks at Activist Insight put together a list of the firms that were most supportive of activists in 2014.
BlackRock supported Sotheby’s, Bob Evans campaigns
At the top of the heap was BlackRock, which supported ten activist campaigns in 2014, including the campaign against Sotheby’s, which was launched by Dan Loeb’s Third Point. According to Activist Insight, BlackRock looks at several factors when deciding whether to support an activist campaign. For one thing, they examine the company’s management and the track record of the activist. Then the firm’s management looks at whether they think the activist’s concerns are valid.
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They also consider the viability of each of the plans—the one put forth by the company’s management and the one put forth by the activist—and whether the activist’s proposed changes will result in the desired changes. Additionally, they consider whether the activist “represents the best option for enhancing long term shareholder value.”
Here’s a look at BlackRock’s full activist slate for 2014 (This chart has been corrected from our previous report.). All charts in this report are courtesy Activist Insight.
Florida State Board (SBA) fund mirrors BlackRock
The Florida State Board of Administration, which manages $177 billion, was tied with BlackRock in terms of the number of activist campaigns it supported in 2014. One of the biggies supported by the fund was the high-profile activist campaign against Darden Restaurants, which was run by Starboard Value. The fund’s analysis focuses on two main factors: whether the activist has successfully demonstrated that change is needed and whether the activist will be better-equipped to make the change than the company’s management.
When activists seek control of a company’s board, the fund’s management wants to see “a well-reasoned and detailed business plan,” a transition plan and a list of a “qualified and credible new management team.” Here’s the full list of activist campaigns supported by SBA.
TIAA-CREF Asset Management supported nine campaigns
Activist Insight found that TIAA-CREF Asset Management, which handles $840 billion in assets, tends to vote for activists they think will represent long term shareholder interests the best. The firm tends to follow a variety of different engagement activities, for example, by supporting an activist’s attempt to change a company’s board members.
TIAA-CREF supported these nine campaigns in 2014:
AllianceBernstein, Dimensional Fund, Illinois State Tie for third
Activist Insight reports that AllianceBernsein, Dimensional Fund Advisors and the Illinois State Board of Investment each supported eight activist campaigns in 2014. Alliance Bernstein tends to evaluate each activist’s battle for control of a board on a case by case basis with a focus on maximizing value for shareholders.
Dimensional Fund looks at the target company’s long term financial performance compared to its industry, the track record of the company’s management and the “quality” of the activist’s criticism of them, the activist’s strategic plan, the qualifications of any board nominees, and other factors.
The Illinois State Board of Investment looks at the qualifications of board member candidates, the quality of the activist’s plan, and whether the activist shows commitment to shareholder interests and other constituents like employees and customers.