“Most traditional fund managers might have 600 to 1,000 stocks in their portfolio, we might have six”
The ICAEW’s Centre for Business Performance has published a short report on shareholder activism in UK quoted companies, which can be downloaded for free here. The report discusses:
- What is an activist/activism?
- Boards’ reaction to activist intervention
- The tactics used by activist investors
- Dialogue and engagement with activist investors.
On the tactics used by activists, the report found that:
“Most shareholder activists seem to follow a two-fold strategy: (1) research about candidate targets, which culminates in building a shareholding; and (2) direct engagement with management regarding the issues identified by the activists. Although notorious for manipulative use of the media, activists we interviewed stressed that while they did use the media to pressurise management, it was not a preferable course of action and was used only as a last resort.”
Although this is an interesting report, it appears inherently flawed by the seemingly low level of engagement that the authors had with actual activist investors – only Knight Vinke and Cevian Capital are acknowledged as having participated (although the authors suggest there may have been engagement with anonymous interviewees).
All the other interviewees are the usual parade of corporate governance worthies – Marks & Spencer plc, Governance for Owners, the FRC, the CBI and Hermes. It’s hardly a report informed by the aggressive edge of activist investors.
Friendly Corporate PSL
To subscribe for our free weekly update e-mail, click here.
