Activist short-sellers had to look harder for overvalued companies in 2017, with the number of companies targeted falling 30 percent on 2016 levels, according to data from The Activist Investing Annual Review 2018, produced by Activist Insight.
The review, published tomorrow, provides commentary on the drop in activist short-selling, highlighting the fact that campaigns based on simple overvaluation have decreased while campaigns based on fraud allegations have risen as a proportion of the total.
With hedge fund managers Greenlight Capital and Third Point Partners noting the importance and challenges of short-selling in investor letters in recent weeks and with high-profile campaigns such as Steinhoff International dominating the airwaves, activist short-selling remains a topical issue.
Josh Black, editor-in-chief at Activist Insight, tells IR Magazine: ‘Activist short-sellers found market conditions challenging in 2017, as stocks generally climbed higher. That meant they targeted far fewer large companies, where momentum was stronger, and focused on more impactful allegations, such as fraudulent activity.
‘Nonetheless, many of the major players in this area continued to be busy in 2017 and will be watching eagerly for catalysts that could help stocks fall in a different economic climate. As fund managers such as Dan Loeb [founder of Third Point Partners] have said recently, there are still opportunities available for short-sellers. They will continue to be a presence in the market.’
The IR Magazine Think Tank – West Coast is an invitation-only event exclusively for senior IROs. It is free to attend and our unique format enables participants to network extensively, discuss, debate and dissect topical issues affecting today’s IROs.
Agenda highlights include The big governance debate: The ‘push and pull’ between increased activism and the rise in passive investments. The investor landscape is becoming more polarized, with growth in both short-horizon and long-horizon investors creating different challenges for governance and engagement. This session will feature panelists from opposite ends of the spectrum to help you understand what motivates activist hedge fund managers, what passive investors are looking for and where there may be some interesting common ground developing.