Activist fan, there’s quite a lot of excitement in insurers with a bid-for-all going on. Midstream oil and gas getting a bit interesting too. A little outside our activist-focused purview, however. In any case, today is a sizable day in terms of activist news. Activist investing news and stories for June 22 below. You should know by now that the free newsletter is on a 24-hour delay. Subscribe to Activist Strategy to get it on publication day or request a two-week free trial here. As usual, check out the tweets on @activiststocks to stay in the know and get on the free daily newsletter list.
- Pinnacle Foods caught a bid last week after the ConAgra-JANA Partners news last week. Stock is up 10% of the last week. Activist target itself, not likely, but it could be a benefactor of ConAgra’s asset sales.
- Activist hedge funds still killing it this year, with 30% of activist hedge funds with YTD performance of 10% plus, while only 14% of all hedge funds are up 10% or more YTD.
- Franklin Resources upped its stake in Axiall from 6% to 7.4%. It went active in May and is out of the ordinary for Franklin [our WTF thoughts, partial paywall]. Axiall has said it would explore strategic alternatives, including a potential sale.
- Trian Partners has started the downsizing of its Wendy’s position, now owning just 21.9% of the company, versus its previous 24.6%.
Steve Cohen alum up 22% YTD explains why you should ignore those old market adages
Prentice Capital Long/ Short Equity Fund was up 2.7% net for the third quarter. Year to date through the end of September, the fund is up 21.9% net. The S&P 500 was up 8.9% for the third quarter and 5.6% for the first nine months of the year. Q3 2020 hedge fund letters, conferences and Read More
- More on activism in Japan, with a focus on tobacco. BBG piece on how Children’s Investment Fund battled Japan Tobacco for a dividend hike a couple years ago. It lost its proxy battle, but since then the company has been upping its dividends and buybacks as well as refocusing the portfolio. It appears that even with a loss, Children’s is getting a win, or so they’d have you beleive [link]
- Columbia Law School blog has a post on how important independent boards are. of note, “An activist hedge fund can create long-term value at a public company if the Board [board of directors] has enough independence to act as an impartial arbitrator deciding between the advices provided by executive management and the activist hedge fund” [link]
- The Boston Globe has a piece on how activist investors are targeting biotechs. The big issue being that activists “always” want to cut R&D, which is bad for biotechs. But the key takeaway is “in the end, what really matters is who can present the most compelling plan to create shareholder value” [link]
- Cooley LLP has a piece on how executive compensation can be a trigger for activism. I think that’s pretty clear, however. Benchmark your compensation and base it on performance. Big takeaway for me from the piece is, “A recent trend among some prominent hedge fund activists is to focus on different performance metrics, such as economic profit (i.e. net operating profit minus a capital charge for invested capital) and return on invested capital or equity, rather than revenue-related metrics” [link]
What we’ve been working on-
- Twitter activist talk