Shareholder Activism Mid-Year 2020 – ValueWalk Premium
Shareholder Activism Mid-Year 2020

Shareholder Activism Mid-Year 2020

The latest Mid-Year Review 2020 from Activistmonitor, a tool for advisors and the investment community, giving a fresh perspective on shareholder activist campaigns across Europe and North America.

Q2 2020 hedge fund letters, conferences and more

The latest report found that COVID-19 clearly impacted the launching of activist campaigns, with a 25% drop from 2019 levels. For the first half of 2020, there were 101 campaigns initiated, a decline from 134 campaigns in 2019.

Key Data Points

  • The majority of new campaigns were launched by 13D filings, a considerable change as compared to last year, where 61 were initiated via 13D filings and 73 via non-13Ds.
  • Large campaigns saw the biggest impact from COVID-19. In the first half of the year, there were seven campaigns with market caps exceeding USD 10bn that caught the attention of activists versus 21 last year.
  • The energy sector had the biggest percentage drop in campaigns, with just two newly initiated campaigns, down from 13 last year and down from 19 in 2018. Activists are demanding E&P companies to return free cash flow to shareholders instead of re-investing in the business due to the sector’s poor long-term outlook.
  • Healthcare was hard hit with a 56% drop in campaigns, while Industrials dropped by 33%. COVID-19 is expected to hamper business prospects in a number of sectors, including long-term healthcare facilities.
  • Technology, media, & telecom (TMT), though, held up quite well, with new campaigns increasing to 37 from 28, and real estate also increased from a low level, ticking up to five from four, this despite the pandemic’s impact on retail.

Shareholder Activism Mid-Year 2020: North America in Review

Letter From the Editor

COVID-19 has added an almost undefinable level of uncertainty to all aspects of the global economy, including activism.

We entered the new year with activity levels consistent with those seen in previous years, with 39 campaigns launched in January and February of 2020 roughly mirroring the 43 launched in the same period in 2019.

However, as the novel coronavirus hit the shores of North America in March, the number of new campaigns shrank, impacting first half data, with 101 registered for the first six months of 2020 versus 134 campaigns in 2019, a 25% drop.

Super-campaign companies with market capitalizations exceeding USD 10bn were impacted most, with campaigns dropping to seven versus 21 in the first half of last year, or a 67% drop.

The energy sector saw the biggest percentage drop, with just two newly initiated campaigns, down from 13 last year and down from 19 in 2018. Healthcare was also particularly hard hit with a 56% drop, while Industrials dropped by 33%.

Technology, media, & telecom, though, held up quite well, with new campaigns increasing to 37 from 28, and real estate also increasing, ticking up to five from four.

In the following tables and graphs, we break down the data for the first half of 2020, including the make-up of activist demands and how settlements fared, and also list the activists who have been the most active.

Stay safe.

Ed Mullane, Editor

New Campaigns Launched

COVID-19 clearly impacted the launching of activist campaigns, with a 25% drop from 2019 levels. For the first half of 2020, there were 101 campaigns initiated, a decline from 134 campaigns in 2019. 62 campaigns came to light via 13D filings, while 39 campaigns were initiated without 13D filings. In an interesting shift, the majority of new campaigns were launched by 13D filings, a considerable change as compared to last year, where 61 were initiated via 13D filings and 73 via non-13Ds.

Shareholder Activism Mid-Year 2020

Activity Overview & Settlements

Activity Overview

Large campaigns saw the biggest impact from COVID-19. In the first half of the year, there were seven campaigns with market caps exceeding USD 10bn that caught the attention of activists versus 21 last year. Companies with market caps above USD 5bn saw 12 campaigns initiated, compared with 28 last year.

A sample of the larger campaigns included Evergy (Elliott Management), Harley Davidson (Impala Asset Management), Restaurant Brands (Pershing Square), Teck Resources (Tribeca Investment), American Homes 4 Rent (Land & Buildings), and Hexcel (Fairlight Asset Management).

Shareholder Activism Mid-Year 2020

Settlements

Settlements stayed steady, with 37 registered as of midyear, equaling the 37 from last year.
Starboard Value settled with Box, Commvault, and Merit Medical Systems, all of which agreed to board changes and other concessions. Tivity Health settled with HG Vora in February, with a new CEO appointed in May, and Impala picked up a board seat at Harley Davidson. And after a contentious battle with Mack-Cali, Bow Street settled and took control of the REIT’s board.

Shareholder Activism Mid-Year 2020

Read the full report here.


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