In recent weeks, hedge fund activists have been exceedingly active, with a focus on two of the biggest players in the sector; Starboard Value and Trian Fund Management.
Following the retirement of Rupert Murdoch, Starboard Value has targeted both News Corp.’s dual share-class structure and its digital real-estate business. Simultaneously, the company has also built a significant stake in contract-research operation Fortrea Holdings.
In a parallel move, Trian Fund Management is renewing their bid for board seats at Disney after patience with Bob Iger dissipated alongside the company’s stock price. Just like Starboard, it’s not sticking to one fight at a time – Trian has also built a stake in insurance giant Allstate.
As observed, publicly listed shoe companies are having a tough week with Vans owner VF being under close scrutiny by Engaged Capital.
Furthermore, the vulnerability of companies to an activist assault is not the only risk they face. With criticisms of Environmental, Social, and Governance (ESG) considerations on the rise, short-sellers have intensified their activities. They’ve preyed upon green-economy stocks, leading to a nearly 30% drop in the S&P Global Clean Energy Index this year. Even so, Goldman Sachs’ global head of sustainability argues that a circular economy could offer a defense against such pressures.
On a regulatory front, the Securities and Exchange Commission (SEC) has recently moved to limit the time frame in which activists can report stakes of 5% or more from 10 calendar days to just five business days. This revision has been met with criticism from activists, arguing that it could make it hard, if not impossible, to launch a profitable campaign. Even short-sellers are not immune from this heightened scrutiny as a new rule mandates hedge funds and other entities to report gross short positions of 2.5% or $10 million every month.
In conclusion, the increasingly fraught world of financial activism is seeing some significant shifts – both from corporate moves and regulatory changes that will likely affect the landscape moving forward.