After Disney and Salesforce, What Activists May Target Next
Volatile markets are tricky for investors to navigate, but that doesn’t mean they lack opportunities—especially for activist investors.
After a 19% drop in 2022, the S&P 500 index is up about 1% so far this year. Yet the broader market’s performance belies the tension among sectors, and even within sectors, as investors try to figure out the best places to allocate capital in a market convinced that a recession is looming.
It’s the type of market that usually attracts activists. Indeed, this year we’ve seen activist hedge funds choose big targets such as Walt Disney DIS –2.67% (ticker: DIS) and Salesforce CRM –3.10% (CRM), to some early success. Trian Partners backed down from a threatened proxy fight at Disney after the company agreed to cost-cutting measures, and Salesforce delivered a blowout quarter while carrying on its back at least five activists pushing for changes.
And there are even more enticing opportunities that may lure additional cage rattlers, according to Wolfe Research. Each month, the research firm screens companies to find ones that have underperformed either the S&P 500 or their own sector while also experiencing weaker margins. This month, 11 new names were added to Wolfe Research’s screen, including eBay EBAY –2.12% (EBAY), Whirlpool (WHR), Constellation Brands (STZ), and Kellogg K –0.36% (K).
While appearing on a screen is no guarantee that an activist will approach, a screen can be a useful tool for sussing out investment opportunities—possibly even before an activist boost.