On Tuesday, October 18, activist investors gathered at a conference in New York City to discuss the current state and the future of business activism. Despite the chaotic state of the market, the summit was packed, and investors say it's the perfect time to push for changes.
According to The New York Times' DealBook, the 13D Monitor Active-Passive Investor Summit was buzzing with excitement. While downturns in the market have traditionally signaled a drop in activist investing, the hedge fund managers and corporate lawyers at the conference said the current turbulence has uncovered many new opportunities.
"Periods of rising tides hide a lot of problems," Caitlin McSherry, director of investment stewardship at Neuberger Berman, said on Tuesday. "When the tides go out, you start to see more problematic situations expose themselves. And we are looking to take advantage of those situations."
Activist investors buy up company stock for the express purpose of bringing about some sort of change in their corporate strategy. This often includes things like installing new, specially chosen board members, initiating stock buybacks, and selling portions of the business.
A recent change in the U.S. Securities and Exchange Commission's rules surrounding director elections will also now make it easier for firms to recommend director candidates to shareholders.
Two businesses mentioned as targets for activist investing were Colgate-Palmolive
The chief executive of Third Point, Dan Loeb, revealed in an investor letter that he has purchased a stake in Colgate with the aim of convincing the company to spin off its pet food business, Hill's Pet Nutrition.
"There is meaningful hidden value in the company's Hill's Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate's consumer assets," the letter said.
Soon after activist investing firm Starboard Values revealed its stake in SaaS company Salesforce, Jeff Smith, the chief executive of Starboard, spoke about the tech company's potential, but said that it was currently operating on a "subpar mix of growth and profitability."
"Salesforce is ingrained in the fabric of so many companies and has become so important in the way they operate and conduct businesses," Smith told CNBC.
