Activists and Coronavirus

Funds will target devalued firms after crisis 05 May 2020 Activists and Coronavirus

Angharad Carrick at CityAM writes an extensive story on the activism landscape in light of coronavirus. Much has been made of the comparison between the coronavirus crisis and the global financial crash over a decade ago.The pandemic has left dozens of listed UK companies in need of a lifeline, with the travel and leisure sectors devastated by government-imposed restrictions.

FTSE firms across all sectors have witnessed their stocks implode as the coronavirus lockdown has forced them to furlough staff. The question now facing many boards is whether – as happened in 2008 – hedge funds and other activist investors will begin circling these distressed companies. However, despite widespread fears of opportunistic actions, activists are biding their time – for now.

There is a general consensus that activists will not begin campaigns in the midst of the pandemic, despite a crash in valuations. In part this is down to an awareness among activists that new campaigns would generate a large degree of scepticism. Ali Saribas comments: “I don’t think there’s a market for it. Activists know there would be some kind of scepticism. Adding another complicating factor when a company is in survival mode may not necessarily be the right timing for this type of campaign.” Activists cannot enact change by themselves and need to win over other investors to support their campaigns.

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