Activist Insight data shows renewed appetite for large cap targets after tailing off in 2016.
Almost one-in-three U.S. companies publicly subjected to demands by activist investors in the first half of 2017 had a market capitalization of above $10 billion, compared to an average of around 27% between 2013 and 2016.
Over 100 such companies were targeted in the first half of 2017 – exceeding the total of any year since 2010 and crossing a threshold approached in recent years (2015 and 2016 totals were 94 and 96 large cap companies respectively).
Jim Chanos has a new short target in his sights. Earlier this week, the hedge fund manager disclosed that he is betting against "legacy" data centers that face growing competition from the trio of technology giants, which have previously been their biggest customers. The fund manager, who is best known for his winning bet against Read More
U.S. companies targeted by market-cap
|Market-Cap||2013 H1||2014 H1||2015 H1||2016 H1||2017 H1|
Source: Activist Insight Monthly Half-Year Review 2017
The data is among the findings from Activist Insight Monthly’s Half-Year Review 2017, produced in association with Olshan Frome Wolosky. Other findings include:
- The total number of companies targeted was 485, slightly over half of 2016’s total of 806.
- Funds employing activism as a primary or secondary function were less active, targeting just 139 companies so far this year, compared to 188 in 2016 and 184 in 2015 in the same period.
- Despite high profile campaigns at Nestlé and BHP, activism in Europe and Asia appears flat or slightly down.
- The number of proxy fights in the U.S. fell slightly, with management winning a higher proportion than last year.
Activist Insight data show management winning 12 U.S. proxy fights for board representation in 2017 that went to a vote (one less than last year), and dissidents winning at least one seat in seven fights – slightly over half last year's total of 12. Only 23% of contests settled this year, down from 41% in the whole of 2016.
Commenting on the data, the report’s editor Josh Black said, "Activists have responded to a turnaround in the markets by making ever more concentrated bets on large cap companies.
Andrew Freedman, the co-head of Olshan’s Activist & Equity Investment Group, is interviewed in the report and contributes a foreword. Both articles touch on key themes this year, including the rise of large cap activism, social media in proxy fights and aggressive use of corporate bylaws to disenfranchise activists.
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Article by Activist Insight