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Apr 30, 2019

Shareholder activism down more than 40 percent in Canada

Data shows activism down globally in Q1 but mixed bag regionally

The number of Canadian firms publicly targeted by activist investors in the first quarter of 2019 is down 43 percent on the same period last year.

Whereas Q1 2018 saw 32 firms come under attack by activists, data from Activist Insight shows that just 18 were the subject of a campaign in Q1 2019.

‘Activism has slowed in Canada this year, partly because mining stocks have rallied after last year’s bear market and begun to address their weakness through M&A,’ Josh Black, editor-in-chief at Activist Insight, tells IR Magazine

He adds, however, that ‘acceptance of activism as a tool seems to be spreading throughout the investment world and last year’s record number of companies targeted suggests it will not go away.’

Black says Activist Insight’s data suggests that the end of 2018 was ‘fairly busy’ in Canada, providing a possible explanation for the dip at the start of this year.

In terms of what activists want from the Canadian companies they have targeted so far this year, board-related campaigns remain the most popular at 41 percent in Q1, though that is down from 48 percent on the same period last year. This is followed by ‘other governance’ issues at 28 percent (up 2 percentage points on Q1 2018) before dropping to just 10 percent for the next-most popular activist focus: remuneration (down from 14 percent).

But it’s not just in Canada where things have calmed down. Activist Insight’s report on activism in the quarter states that ‘Q1 2019 was the quietest quarter to an opening year by number of companies publicly subjected to activist demands since 2015’, adding that ‘the number of companies publicly facing impactful campaigns in Q1 fell to its lowest since 2014.’

Regionally, however, it’s a mixed bag. For example, while activists remain most active in the US, with 189 companies targeted publicly in the first quarter of the year, this is a drop from Q1 2018 when 227 companies were targeted and the US saw its busiest quarter in five years.

Highlighting just how drastically different the situation is in the US, the 25 companies publicly targeted by activists in Australia saw it become the second-busiest country in terms of activism. After a Q1 2018 record high of 34 campaigns in Asia, figures this year have fallen back to 21 over the quarter. 

Activist Insight’s overview of the quarter also notes that the UK had its busiest Q1 in recent years at 17 campaigns, while European firms overall saw their lowest levels of activism since 2014. 

Elsewhere in Q1 2019, Portugal and Russia each recorded their first public activist campaigns in recent years

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Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...