LBOs and activists for the corporate have-nots
Activist investors convene at the Pierre Hotel
The marbled hallways at The Pierre hotel in New York buzzed with chatter on Tuesday about a surge in shareholder activism.
It was the marquee annual gathering for activist hedge funds at the 13D Monitor Active-Passive Investor Summit, where investors and advisers swap notes on who’s preying and being preyed on.
Investors’ obsession with artificial intelligence stocks and little else has created a market full of have-nots trading at low valuations and susceptible to calls for activist shake-ups.
“They’re readying the knives,” one adviser at the event told DD’s Oliver Barnes and Amelia Pollard.
Oil and gas equipment supplier Baker Hughes and eyecare group Cooper Companies were among the companies facing the glare of activist investors at the conference.
Starboard Value’s co-founder Jeff Smith took the stage early in the morning. He lobbied for Tripadvisor to sell off its restaurant bookings platform or even put itself up for sale, as well as outlining investments in construction group Fluor and payments company Bill Holdings.
This year is on course to be a record one for shareholder activism, with 191 campaigns launched in the first three quarters, ahead of the same period during 2018, the previous high-water mark, according to a report by Barclays.
Even American football star Travis Kelce is getting in on the action. He’s teaming up with activist hedge fund Jana Partners to push US theme park operator Six Flags to revamp its marketing strategy and customer experience, the firm also unveiled at the event.
Waiting in the wings as activist hedge funds are busy agitating for change are private equity groups, emboldened by abundant financing and ready to pounce on smaller companies unloved by the public markets.
The destination of many of these companies could ultimately be the same as medical technology group Hologic, which was taken private by a consortium in an $18.3bn deal on Tuesday. The company has been a perennial take-private candidate since Carl Icahn became its largest shareholder in 2013.
While Icahn has long since sold his position, Hologic’s noisy corporate structure failed to win a high valuation from shareholders.
Now, with banks offering cheap credit to finance a brewing wave of mega deals, Hologic has found a new home inside the portfolios of Blackstone and TPG.
Other large but middling public companies could soon face a similar fate.