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Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
In case you missed it
Activism this week (Friday March 3)
- The dangers of allowing activists to pre-anoint new CEOs and set their pay
- Biotech as the new hot area in activism
- Universal proxy
Activist Insight Monthly March 2017 (subscriber only)
- What the Trump administration means for activism and shareholder rights
- Cartica Management
- Glaucus Research
- How other countries compare to the U.S. acceptance of activist board members
- Mantle Ridge @ CSX
- Conference roundup
- Vulnerability report
- News and new investments digest
What the activism world is talking about
Luxury goods are becoming an area of interest for activist investors, with Burberry joining Tiffany & Co (again) and Kate Spade as 2017 targets in the past week. Hugo Boss was also reported to be a target of Belgium’s Albert Frère, although that rumor may have been misplaced. Now, interest in such companies is not wholly new – Knight Vinke’s Eric Knight told me in October 2015 that his fund was eyeing the sector, while ValueAct Capital Partners and Paulson & Co were in piano-maker Steinway Musical Instruments when it was sold to private equity in 2013. The playbook for 2017’s crop is likely to be the same as in years past – sell the company, leverage long-neglected assets such as real estate, or maximize profits by rejuvenating tired product lines or bloated operations.
On Monday, CSX settled its dispute with Paul Hilal’s Mantle Ridge and Hunter Harrison, who will be appointed CEO under a four-year contract. The company caved in to pressure to award five seats on the board to the dissidents. However, CSX said that it will seek a shareholder vote on the $84 million compensation demanded by Mantle Ridge for the benefits forfeited by Harrison after his separation from Canadian Pacific Railway.
Our most read story last week
Frère discloses stake in Burberry (Activist Insight Online login required)
What we’ll be watching for this week:
- Yindge Gases holds a special meeting requisitioned by activist directors, who this week claimed the scalp of the company’s CEO – a likely prelude to a private equity or strategic takeover.
- OptimizeRX will report earnings, shortly after being told to sell itself by Wolverine Asset Management.
It has been a rough three years for Signet Jewelers, which in January 2014 appeared to activist investor Corvex Management to be a likely candidate for industry consolidation. A year later, a merger with Zale had fallen apart, the stock was down one-third from highs of $150 and short seller Marc Cohodes was publicly betting against the stock. The past few weeks have arguably been worse. Claims of widespread sexual harassment and a New York Times profile of its financing arm’s flattering accounting practices has shares down to $65. On Twitter yesterday, Cohodes said the company has “every issue there is” and is “a Train Wreck from here.” Two investors, Abrams Bison and private equity firm Leonard Green, think there is value – particularly in the credit portfolio, which is the subject of a strategic review – but Corvex has halved its stake. Where the bad news ends is almost unknowable.
Stat of the week
As of March 3, four Asian-headquartered companies have been publicly targeted by an activist based outside of Asia this year, representing 17% of Asia headquartered companies targeted. View more trends and stats like these in our 2017 Annual Review.