First-half data from Lazard show that the number of board seats won by activists so far this year rose 6 percent to 86 seats. That comes as U.S. activist campaign volume plunged 40 percent. How can this be? For one, more than one-third of those seats were won by just two activist hedge funds: Starboard Value and Elliott Management. Another reason: more and more, activists are targeting more board seats through long slates, resulting in fewer campaigns waged and more seats won.
As for the rest of the world, recent market volatility and ongoing economic uncertainty did not seem to spook activists outside of the U.S. Only halfway through the year, and Japan has already matched its 2019 record total of activist campaigns. Activists are also doubling down in Europe, with activist activity up 28%.
In other news, one of the most significant activist-related proposals to hit the news in the last year arrived early in the week, after the SEC proposed increasing the reporting threshold for 13F filings from $100 million to $3.5 billion, a move that would allow about 90% of asset managers to keep their holdings private. While the SEC advocates that changing the threshold would alleviate compliance costs for small managers – at $30,000 per year, a tidy sum for some and chump change for others – the anonymity afforded to these companies would hurt the market, the Financial Times’ Lex column argues. Lex recommends the SEC shorten the 45-day 13F filing window instead.
Finally, Peter Eavis in the New York Times asks why companies don’t tie executive compensation to diversity targets. With many corporations announcing new hiring initiatives in the wake of the Black Lives Matter movement, he writes, including diversity targets in executive compensation plans could help turn these plans into actions with tangible results.
Have a great weekend,
Lars and Gabriella