Companies Need to Prepare for Activist Investors

By Rachel Carroll

Companies have always viewed delivering profits, healthy dividend payments and a stable, or rising share as the best way to ensure positive investor sentiment. If companies want to deal effectively with activist investors, communication is key.

 

Activist investors are on the rise. Recent research from asset manager Lazard identified activist campaigns at 226 larger companies globally in 2018, a 20% rise on 2017, with activist funds investing a record $65bn of fresh capital. Meanwhile, the Activist Investing Annual Review 2019, produced by Activist Insight in association with international law firm Schulte Roth & Zabel, noted there were as many as 922 companies targeted in 2018 worldwide compared with 856 in 2017. Asia hit a record high in 2018 with 111 companies targeted, just slightly lower than the figure of 148 for Europe. While such statistics may strike fear in the hearts of some boards and chief executives, having a clear investment research strategy focused on a number of key measures, can combat or even prevent activist investors from taking predatory positions and fomenting unrest. Keeping close to shareholders by constantly communicating with them, monitoring shareholder registers, building relationships with funds or individuals that take up significant holdings, developing strong links to investment analysts and having a strong social media presence are all very effective measures that companies can take to guard against activist investors.

 
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Rachel Carroll is President, Managing Partner Edison Inc

 

 

References:
1. https://www.irmagazine.com/activism/activist-investors-targeted-922-companies-2018-report-highlights
2. https://www.ft.com/content/ca1f3af2-289e-11e9-a5ab-ff8ef2b976c7
3. https://www.ft.com/content/ab9c770e-0155-11e9-9d01-cd4d49afbbe3
4. https://www.standard.co.uk/business/market-report-just-eat-fattens-up-on-rumours-amazon-may-miss-deliveroo-a4186626.html
5. https://www.forbes.com/sites/goncalodevasconcelos/2018/01/11/3-easy-steps-to-keep-your-investors-happy/#75b3667f68a9
6. https://www.bbc.co.uk/news/business-47466821

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.