Activist Stocks: Agrium, General Electric, Goodbye Jimmy Lee by Activist Stocks
Activist gawker, beast of a Thursday; might have to save this for a lunchtime read. Activist investing news and stories for June 18 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.
- ValueAct ups its stake in Agrium by about 10%, now owning 6.8% of the company. Still plenty of money left over from the Valeant sale to make another move [link to our piece on Ubben’s next target]
- GE calls caught a bid from an activist investor rumor. We won’t entertain this with who it could be.
- First Kirk Kerkorian, now we’ve lost the famed dealmaker Jimmy Lee. Some of the best remarks I’ve seen about Jimmy the person is from Dan Loeb h/t moneybeat
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
- @bdcreporter has a piece on Phil Falcone versus MCG Capital battle [Falcone’s letter here], where HC2 is once again trying to buy MCG, upping its offer, trying to usurp PennantPark. But of note, “We doubt MCGC’s Board will change their minds based on these sweeteners. The bird in the hand is likely to be preferred to the slightly better priced, but controversial and hard to value bird in the bush [link]
- @AntoineGara at Fortune has a long profile on Starboard Value’s Jeff Smith. Of note, Smith says “If Greece may or may not be a part of the Euro that has nothing to do with whether or not people are going to eat at Olive Garden or shop at Office Depot, it’s just not relevant. As long as you are buying into companies at reasonable multiples of their pro forma cash flows – pro forma for changes that we know we can make – then we are going to be really happy owning those businesses” [link]
- Proxy Mosaic has a study out on a 100 sample of activist campaigns focused on financial engineering (i.e. buybacks, spinoffs, acquisition, divestitures). It’s a long read so we’ll hit the high points below [link to paper]
- JANA Partners, Starboard Value, and Blue Harbour are the most active in terms of pushing financial engineering theses.
- Some of the most active players – specifically Third Point and Elliott – also among the worst-performing.
- The average total return for these campaigns is less than 1% on the announcement date and only about 5% during the 60-day window around the announcement date. But the total return jumps to 20% one year after the announcement.
- Acquisitions are least successful with an average total since the announcement of -3.56%. Spinoffs are the most successful, with an average return of more than 50%.
What we’ve been working on-
- Finishing up an ode to Kirk Kerkorian
- Activist pushing for a merger in the equipment business [full paywall]
- Parts business with a catalyst [full paywall]
- A deeper look at a “new” activist target [full paywall]
- Digging into small-cap tech activist targets [full paywall]
- The OM Group pissing and moaning [link]