What the activism world is talking about
CSX shares were slightly higher Monday, despite the news that its CEO, Hunter Harrison, had died. The gains were most likely a cautious (and partial) reversal of fortunes since the company announced Harrison was going on medical leave. Fortuitously, the company had only just hired a second-in-command for Harrison, Chief Operating Officer Jim Foote, in October. That looks efficient and laudable, given that the company had bet $84 million on Harrison’s ability to reform the railroad earlier this year. Call it precision management, after Harrison’s precision railroading formula for boosting profits.
Worthy on any other day of its own focus, Procter & Gamble also rose Monday on the news that it was appointing Nelson Peltz to its board. The company claims it won the proxy contest with Peltz’s Trian Partners following a second recount, but effectively conceded the reason for the settlement in a shareholder letter from CEO David Taylor: “Because the election results were so close, and because a large number of shareholders voted for Nelson Peltz to be a director…” Taylor says he has reached a common understanding with Peltz about the things that Trian will not push for, including moving from Cincinnati, breaking up, adding leverage, or cutting research spending. The two sides appear not to have seen the need for a standstill, however, raising the question of further hostilities if progress doesn’t happen over the next year.
The LF Brook Absolute Return Fund lost -2.52% in the second quarter of 2021, compared to a positive performance of 7.59% for its benchmark, the MSCI Daily TR Net World Index. Year-to-date the fund has returned 4.6% compared to 11.9% for its benchmark. Q2 2021 hedge fund letters, conferences and more According to a copy Read More
What we’ll be watching for this week
- Will The Children’s Investment Fund continue to campaign at the London Stock Exchange after the special meeting it requisitioned is held today?
- Will activists in Australia triumph at Mermaid Marine Australia or MMA Offshore?
- How quickly will CSX move to confirm a permanent replacement for Hunter Harrison?
- Will any shorts look to boost their year-end returns with a well-timed new report?
A bonus second poll! What’s the best longread on short activism this year?
Chart of the week
So far this year, 18% of Europe-based companies publicly subjected to activist demands operated in the services sector, compared to 23% in the same period last year.
*All data as of December 15.
Article by Activist Insight