The Activist Investor Blog
The Activist Investor Blog
2015 Preview - Try to Top This!
Our prognosticating power seems to have improved slightly. Our forecast from this time last year had a few hits and misses.
We like our hits, and don’t regret the misses. As with the year just past, activist investors should do very well. We of course cannot assess just how well individual activist situations might do. We expect some interesting and important corp gov battles, and expect the regulatory scene to remain quiet.
Many Activist Situations to Watch
We can’t forecast which activist investors will target which companies. We already know of a few situations worth following, with innovative ideas, novel partnerships, and creative activist strategies and tactics.
❖Zoetis: A mostly typical activist situation, with a creative partnership between Pershing Square and Sachem Head, that could get contentious in 2015. With Bill Ackman and his protege Scott Ferguson involved, watch for all manner of twists and turns.
❖McDonalds: Pershing Square agitated for change here years ago, and the company mostly ignored its pleas to divest company stores to franchisees and put its real estate into a REIT. Lately, chronic underperformance has attracted investor attention again, from Pershing Square and Jana Partners. Rumors abound that they will push the company to ... divest company stores and create a REIT.
❖Staples, Office Depot: Starboard Value owns big stakes in both, and evidently plans to encourage them to merge.
❖TheStreet.com: In a provocative letter, Carlo Cannell urged the company to redirect Jim Cramer’s efforts away from CNBC, and back to the company that he founded and that continues to pay him millions of dollars each year. In 2015 we’ll see how Cramer responds.
❖Dow, DuPont, and Pepsi: Activists have boldly targeted these bluest of blue chips, with Third Point (Dow) and Trian (DuPont, Pepsi) seeking strategic and financial changes at each company.
❖Yahoo: Starboard Value has urged perennial target Yahoo to break up, making this into one of the most significant tech sector activist projects for 2015.
While no one has announced anything lately, we expect investors to continue to press Apple to return more cash, as its stock repurchase plan wraps up at the end of 2015. And, if its share price still disappoints, shareholders at Amazon will likely go public with their concerns.
Delaware’s Golden Goose
Earlier this year, Delaware judges allowed companies to include in their bylaws limits on lawsuits by shareholders. Executives loathe lawsuits, while the Delaware trial bar makes its living off of them. We’ll see who has more pull in the Delaware legislature in 2015, as we expect the trial bar to seek a bill to reverse what the Delaware courts permitted.
Proxy Access, Finally
We saw little progress ever since the DC Court of Appeals overturned the SEC regulations implementing mandatory proxy access. These regulations, though, continued to allow shareholders to propose proxy access at specific companies. So, a group of public pension funds did just that at 75 US companies for 2015.
Companies have also embarked on a clever tactic to oppose this effort - propose their own proxy access program, just much more restrictive than the one that the pension funds want. The SEC already favored the company proposal over the pension fund proposal in one instance. Many other companies will likely adopt a similar strategy.
SEC May Regulate Pay, or Perhaps Not
Last year, we thought the SEC would issue a few regulations of interest to activist investors, mostly around exec comp. We saw very little. Maybe this year the SEC will issue final regulations on pay ratio disclosure and proposed regulations on incentive comp disclosure. Who knows...
Dates and Events in 2015
In 2014, investors could choose from many events, including the Activist Investor Conference and the Value Investing Congress. As of this moment, only the Active-Passive Investor Summit has a scheduled date, for April 13 in New York City. Of course, we’ll attend Invest For Kids, in early November in Chicago.
As always, we look forward to working with our friends and colleagues in what could become yet another interesting year.
Tuesday, December 30, 2014