Activism as a Strategy Versus a Behaviour

Active managers are becoming increasingly comfortable launching campaigns themselves, especially when the company does not have an activist pursuing them already. Ali Saribas commented, saying “These traditional investors did not raise funds to implement an ‘activist’ strategy but are doing that as part of their traditional portfolio management.” to Activist Insight’s Iuri Struta.

Neuberger Berman, for example, has integrated an activism tool into the approach and has gone after small-caps that have poorer corporate governance practices. M&G Investments additionally launched its first proxy contest this year at Methanex due to a disagreement over its strategy. More commonly, active managers take a public stance to support either the activist or the company in a dispute, or making their voice heard when displeased with strategic changes.

In a majority of instances, active managers still express their views through the ballot or behind the scenes engagement. SquareWell Partners’s survey concludes that these investors put a great emphasis on the strength of the activist’s arguments; they particularly like activism focused on strategy and governance and are not very keen on balance sheet and M&A demands.

You can access the full piece here (subscription required).