Shareholder Activism in 2022

Shareholder Activism in 2022

Elon musk’s deal with Twitter is finally over, and no other 𝐝𝐞𝐚𝐥 𝐡𝐚𝐬 𝐠𝐚𝐫𝐧𝐞𝐫𝐞𝐝 𝐬𝐮𝐜𝐡 𝐡𝐞𝐚𝐯𝐲 𝐚𝐭𝐭𝐞𝐧𝐭𝐢𝐨𝐧 𝐠𝐥𝐨𝐛𝐚𝐥𝐥𝐲 as this deal. I have written a few posts on this deal, providing insights on Twitter valuation and how it could impact Twitter and Tesla post this transaction. 𝐇𝐢𝐬𝐭𝐨𝐫𝐲 𝐰𝐢𝐥𝐥 𝐭𝐞𝐥𝐥 𝐮𝐬 𝐢𝐟 𝐭𝐡𝐢𝐬 𝐦𝐨𝐯𝐞 𝐡𝐞𝐥𝐩𝐬 𝐓𝐰𝐢𝐭𝐭𝐞𝐫 𝐨𝐫 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐩𝐮𝐬𝐡𝐞𝐬 𝐢𝐭 𝐭𝐨 𝐭𝐡𝐞 𝐝𝐨𝐥𝐝𝐫𝐮𝐦𝐬.

However, in my view, this deal will affect 𝐮𝐧𝐝𝐞𝐫𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐢𝐧𝐠 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐯𝐮𝐥𝐧𝐞𝐫𝐚𝐛𝐥𝐞 𝐭𝐨 𝐚𝐜𝐭𝐢𝐯𝐢𝐬𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬. Moreover, rising inflation accompanied by a rise in interest rates and geopolitical crises (𝐑𝐮𝐬𝐬𝐢𝐚-𝐔𝐤𝐫𝐚𝐢𝐧𝐞 𝐜𝐨𝐧𝐟𝐥𝐢𝐜𝐭, 𝐒𝐫𝐢 𝐋𝐚𝐧𝐤𝐚𝐧 𝐜𝐫𝐢𝐬𝐢𝐬, 𝐂𝐡𝐢𝐧𝐚 𝐡𝐚𝐧𝐝𝐥𝐢𝐧𝐠 𝐨𝐟 𝐂𝐎𝐕𝐈𝐃) have already impacted the valuations of equities. So activist investors are under pressure to intervene to improve their performance against passive index funds.

For instance, some activist campaigns currently happening globally are:

1)Vodafone is under pressure to restructure and overhaul its board from Cevian Capital.

2)Temasek is pushing Bayer‘s CEO to quit his position in the firm.

3)#CarlIcahn targets McDonald’s over its supplier’s treatment of pigs triggering an #ESG campaign.

The above campaigns 𝐰𝐢𝐥𝐥 𝐢𝐧𝐭𝐞𝐧𝐬𝐢𝐟𝐲 now.

Earlier, activist investors will buy blocks of shares, disclose their position, occupy a seat on the board and then push for reforms like divestitures or acquisitions. 𝐄𝐥𝐨𝐧 𝐌𝐮𝐬𝐤 𝐡𝐚𝐬 𝐜𝐡𝐚𝐧𝐠𝐞𝐝 𝐭𝐡𝐢𝐬 𝐩𝐚𝐭𝐭𝐞𝐫𝐧, and now activist investors will target replacing the existing board instead of making changes in the incumbent board.