Shareholder activism on course for its weakest year in Canada since 2011
The number of Canada-based companies subjected to demands from activist investors is at its lowest level in five years, according to research by data provider Activist Insight.
The research reveals that 44 companies have been targeted so far in 2016 – a 17 percent fall from last year’s record-breaking 53 at the same point in the year. In 2015 as a whole, 60 companies were targeted, up from 54 in 2014 and 51 in 2013.
Based on trends in prior years, Activist Insight predicts that 2016 will see approximately 49 companies targeted – the first time the number has fallen below 50 since 2011.
The data shows a significant drop in activism in both the basic materials and financials sectors compared with previous years. This year, less than 40 percent of targets are basic materials companies for the first time since 2011, pointing to continued weakness in stocks reliant on commodity prices, while targets in the financials sector have fallen from an average of 28 percent of the total to just 16 percent.
While board-related activism is slightly down in 2016 to date – at 46 percent of all demands, compared with an average 2010-2015 rate of 50 percent – M&A activism has become more prominent: 18 percent of all 2016 demands are related to M&A, compared with an 11 percent average.
‘The continued travails of commodity-dependent stocks and more plentiful opportunities in the US has reduced the number of activist situations in Canada in 2016,’ says Activist Insight spokesperson Josh Black. ‘Nonetheless, activists from both sides of the border continue to look at Canadian situations and are prepared to strike when the time is right.’