Activist Investors Increasingly Target The Energy Sector

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Activist investors are increasingly piling into energy companies, recent data shows. Activist Insight published the results of its study in the November issue of its Activism Monthly Premium magazine ( ValueWalk readers can receive 33% discount on  Activism Monthly Premium by using this link to purchase a subscription).

According to the data, 52% of energy companies targeted in activist campaigns since 2010 are based in the U.S. European energy companies were targeted in 22% of the campaigns, while Canadian companies attracted 17% of the activist campaigns in the energy sector.

Activism in energy sector surges

Over 70 energy companies have been publicly targeted by activist investors in the last five years. Among those companies is Panoro Energy ASA (OTCMKTS:PESAF), which ValueWalk exclusively reported, is one of those being currently targeted by activists. CVR Energy (NYSE:CVI) is also among the energy companies targeted in recent years, as Carl Icahn took an interest in 2012.

All charts / graphs are courtesy Activist Insight
All charts / graphs are courtesy Activist Insight

Between 2013 and 2014, Activist Insight reports that there were 48 public activist campaigns against companies in the energy sector. That’s compared to just 18 between 2011 and 2012.

Why activist investors may be interested in energy companies

A number of funds have been reassessing their stakes in energy companies recently due to the decline in oil prices. Some funds, including Carl Icahn’s firm, have seen their returns significantly impacted by energy stakes as a result of the oil price decline. As a result, some experts think activists may target energy companies even more.

Kai Liekefett of business solutions firm Vinson & Elkins told Activist Insight that many activists have begun to discover the energy sector. They think even more activist investors will invest in the sector in the next few years, particularly because “valuations in equity markets may not reflect the intrinsic value of energy companies.”

All charts / graphs are courtesy Activist Insight
All charts / graphs are courtesy Activist Insight

Activist themes in the energy sector

Activist Insight gleaned a number of themes regarding activist campaigns against energy companies. The data shows that the most frequent demand from activists has been for seats on companies’ boards of directors. Researchers found that there were 46 public demands made.

They discovered 17 demands related to mergers and acquisitions, 16 demands for CEO succession and 12 demands related to spinning off assets or business divisions. Researchers also noted that many activists made multiple demands at the same time.

Researchers also said Carl Icahn is the energy sector’s most prolific activist, as he has publicly targeted six companies in the last four years. JANA Partners and Lone Star Value Management each have five public campaigns, while Nanes Balkany Partners has three public campaigns.


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