Shareholder Activism

Unlocking Shareholder Value

JANUARY 24, 2019
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This summary was first published in Activism This Week, an Activist Insight newsletter. Subscribe here.

Activist Insight summarizes Skytop’s recent Shareholder Activism summit with these five observations.

  1. The trade war is going to have an impact on business, and by extension, activism. As one panelist said, a strategy that was right for a company might not be right after markets are shaken up. And it’s causing disruption, including de facto travel prohibitions for North American executives following the arrest of Huawei’s chief financial officer in Canada. “We’re not even in the damn trade war,” bemoaned a Canadian participant.
  2. Activists may be economic creatures but there’s a debate – to say the least – over whether they are sincere in their environmental and social pretensions. Is it about raising capital? Can it justify board changes? Meanwhile, companies are under pressure to up their game not just for their investors but for their consumers and employees.
  3. Companies need to be calm and purposeful in their engagement with an activist. Management should always take a meeting but should first check whether there’s been any communication with the activist, such as with the investor relations department. “You tease it out in a way to find out what an activist wants but to also be responsive,” one panelist explained. Meanwhile, confidentiality agreements need to have a short-term endpoint. “My experience is, most activists will not sign a confidentiality agreement because they’re worried it could function as an indirect standstill,” another said. “Activists want to be cleansed [of insider information].”
  4. Canada’s booming cannabis industry provides opportunities and risks for activism. While a couple have well-reinforced balance sheets and anchor shareholders, retreating valuations are showing up “the rot,” at others. Whether that leads to short attacks, governance campaigns or a push for consolidation depends on fast-moving market conditions but a key problem is that the U.S. legal system is still restricting growth. If demand cools, strategic investors in cannabis companies could be pressured to sell their positions.
  5. “We’re going to see greater government involvement in a number of activist campaigns… Activists are going to have to be more mindful of how they conduct themselves and might receive pushback in areas they are not used to receiving push back,” concluded one participant on the mood in Washington D.C. The Securities and Exchange Commission may decide that main street investors are being harmed by backroom deals between companies and activists. Could the Brokaw Act become a campaign trail talking point?

UPCOMING PROGRAMS

Shareholder Engagement & Communication London

MARCH 5, 2019
THE BLOOMSBURY HOTEL
16-22 GREAT RUSSELL STREET
LONDON, WC1B 3NN UNITED KINGDOM

Global Shareholder Engagement & Activism Summit

SEPTEMBER 26, 2019
DELTA HOTELS
75 LOWER SIMCOE STREET
TORONTO

Shareholder Activism Asia

OCTOBER 2020
RENAISSANCE HONG KONG HARBOUR VIEW HOTEL
1 HARBOUR ROAD
WAN CHAI, HONG KONG

Shareholder Activism

NOVEMBER 19, 2019
CONVENE
810 SEVENTH AVE
NEW YORK, NY

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with industry thought leaders on why and how ongoing shareholder engagement and activism play a vital role in affecting share value

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how activist investors cultivate relationships with companies to positively influence sustained value creation

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the latest campaign practices of activists, how they unfold, their outcomes, and how boards and executives work constructively toward improved stock performance

Skytop Video Series: Interviews at Shareholder Activism NY 2018
The Great Debate with David Katz & Eleazer Klein – Skytop Strategies. View Video
Activist Engagement From the Issuer’s Perspective – Skytop Strategies. View Video
Interview with Jim Rossman, Head of Shareholder Advisory at Lazard – Skytop Strategies. View Video

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