Activist shareholders campaigns outside the US are on the rise, with 2015 seeing more action than any year since 2010.
Figures from Activist Insight show that January to August this year saw 115 campaigns outside the US, a 46% hike on the previous period’s tally of 75.
Campaigns are also up in the US from 225 for the period last year, to 250 so far in 2015. Activist Insight projects that the current year could see as many as 505 activist interventions this year, way ahead of the 2014 total of 417.
According to Activist Insight, 55% of actions are intended to establish seats on company boards. The rest are spread across demands for mergers and acquisitions action, business strategy, balance sheet changes and other governance demands.
Investors have warned that with US stocks trading significantly higher than in Europe or Asia, it was inevitable that US activists would begin targeting new regions.
A report for Reuters cites Rolls-Royce, where ValueAct has become the largest shareholder, and Elliott Associates’ investment in Alliance Trust, as examples of increasing interest in UK companies.
Reuters says the UK is attractive because corporate governance practices make it easier to gain access to information and nominate board members.
The Financial Times reported that Elliott succeeded at Alliance Trust by calling for new board members. The board later revealed it had spent £3m on advisers to defend itself against Elliott’s campaign, which attracted criticism from other shareholders at an annual general meeting in April.
Elliott is now invested in Morrisons, the supermarket, as is Sandell Asset Management. The Daily Telegraph reports that since joining the shareholder register the ailing retailer has sold Kiddicare, the baby products supplier.
Another notable encounter was Sandell’s investment in FTSE 100 transport business FirstGroup. It was reported Sandell sought the sale of US assets and lobbied against the pay deals of directors. Those demands proved unsuccessful and Sandell reduced its holding.
Despite this activity The Telegraph’s Ben Marlow says activist involvement has so far failed to live up to fears: “…despite expectations that activists would become the principal scourge of sleepy, underperforming UK companies, these self-styled corporate crusaders have to date mostly engaged in skirmishes,” he writes.
The FT says activists have emerged victorious in the UK after adopting a “more consensual” tone, rather than employing the brash tactics used in the US of confrontational public letters trashing boards and demanding change.
Meanwhile, Fortune magazine says activism is on the rise in Europe and one of its best proponents is the Swedish hedge fund manager Christer Gardell, through his firm Cevian Capital.
Gardell says he is on the look-out for companies that are “underperforming their potential”. The business has a focused portfolio of 14 positions and sits on the board of ten of them.
When asked how he initiates change Gardell says: “We don’t have a hostile approach; we have a constructive approach. We don’t start a relationship with a lecture. You don’t want proxy fights or anything like that. We back up our ideas with solid arguments and solid facts.”
Gardell says activism is underestimated in Europe because it tends to accompany long-term positions rather than the short-term investment of US hedge funds. He says large family shareholders should also count as activists but are not included in statistics.