Investment bank Lazard believes shareholder activism is going to become more rife in the future.

Shareholder activism occurs when existing shareholders publically attempt to influence a company’s behaviour.

To meet the criteria they have to be shareholders – this excludes shortsellers and political activists who do not own shares. This also excludes private discussions that remain private – a practice common enough that firms such as Regnan exist for this purpose.

Typically, activist investors are larger institutional investors and they may hold stakes in multiple firms. One example is Sir Ron Brierley and his firm Mercantile Investment Company (ASX:MVT) — until his retirement last year.

In 2014, the Abbott government changed the Corporations Act to stipulate investors needed a 5 per cent stake to call a requisitioning meeting in their own right.

This makes it hard, but not impossible, for smaller retail investors to do this.


Activism Down Under

While Lazard’s report did not mention Australia, Stockhead found that the incidence of shareholder activism on the ASX doubled in 2019.

Stockhead also found the most common demands were for the removal of a director and/or obtaining a board seat, each accounting for half of these incidents at least in part.

Additionally, unsuccessful attempts were pipped by the fully successful. But if you add partially successful attempts to the tally, the latter overtakes the former.

Among 2019’s notable episodes was IPH’s (ASX:IPH) bidding war for Xenith IP (ASX:XIP) which the suitor eventually won.

One ongoing case is online market place Redbubble (ASX:RBL), which is being targeted by Emancipation Capital. A letter was served to the board just two days after Christmas expressing concerns about Redbubble’s performance and calling for a strategic review and someone to takeover the company.

This came only two weeks after a solid few months of share price growth came to a halt with a negative trading update.

Code Company Activist Group Start Date Objectives Return during Period Market Cap Stake at Announcement Outcome
RBL Redbubble Ltd Emancipation Capital LLC 27/12/19 Strategic Review; Sale of Company 9.11 $183.6M 1.32 Ongoing
VRL Village Roadshow Ltd Mittleman Brothers LLC 23/12/19 Oppose Merger (Target); Break Up; Sale of Company; Strategic Review; Cost Cutting 1.45 $511.8M 5.13 Ongoing
RSH Respiri Ltd Requisitioning Shareholders (Peter Karl Braun and others) 30/10/19 Remove Director/Withhold Votes; Board Representation 39.34 $23.0M 7.07 Success
AEE Aura Energy Ltd Pre-Emptive Trading Pty Ltd 22/10/19 Remove Director/Withhold Votes; Board Representation -13.75 $6.3M 5.89 Success
CMW Cromwell Property Group ARA Real Estate Investors XI Ltd 17/10/19 Board Representation -3.8 $2.3B 20 Ongoing
WOR WorleyParsons Ltd Dar Group Co 15/10/19 Board Representation 25.67 $4.6B 20 Ongoing
LCT Living Cell Technologies Ltd Pacific Channel Ltd, Masfen Holdings Ltd, T R Harrison Security Trust, and Ogilivie A/C 27/9/19 Board Representation; Remove Director/Withhold Votes -3.3 $7.0M 5.26 Success
MRN Macquarie Media Ltd Wilson Asset Management International Pty Ltd 22/9/19 Oppose Merger (Target); Sale of Company; Strategic Review 1.13 $168.4M 4.7 Unsuccessful
MLX Metals X Ltd APAC Resources Ltd 3/9/19 Board Representation; Remove Director/Withhold Votes -29.54 $64.8M 8.8 Success
DNA Donaco International Ltd Tan Eng Hoe "Gerald Nicholas" and Tan Teck Lee Patrick 28/8/19 Board Control; Remove Director/Withhold Votes 14.94 $40.6M 5.59 Ongoing
VRS Veris Ltd Craig Chapman and Brian Francis Mangano 7/8/19 Board Representation; Remove Director/Withhold Votes 5.54 $15.3M 5 Ongoing
PNN PepinNini Lithium Ltd Cuprum Holdings Ltd and Jai Shankar Krishnan 23/7/19 Remove Director/Withhold Votes; Board Representation -43.92 $3.1M 5 Unsuccessful
APG Austpac Resources NL Robert Claxton and others 15/7/19 Remove Director/Withhold Votes 96.82 $2.0M 0.81 Ongoing
OEQ Orion Equities Ltd/fund Thunderdome Pty Ltd and JIT Investments Pty Ltd 4/7/19 Remove Director/Withhold Votes Ongoing
RFN Reffind Ltd Savvas Hatsisavvidis and Ryan Yearsley 20/6/19 Board Representation -39.68 $1.8M 5.53 Unsuccessful
GBG Gindalbie Metals Ltd Sandon Capital Ltd 19/6/19 Sale of Company; Other; Oppose Merger (Target); Return Capital/Buybacks 8.27 $27.8M Unsuccessful
DNA Donaco International Ltd Spenceley Management Pty Ltd 27/5/19 Remove Director/Withhold Votes -1.32 $47.3M 5.04 Ongoing
AGR Aguia Resources Ltd Requisitioning shareholders (Kemosabe Capital, Henderson International Pty Ltd, Messrs David, and Harry Shearwood) 11/4/19 Board Control; Remove Director/Withhold Votes -39.03 $20.5M 5.39 Ongoing
MTH Mithril Resources Ltd Northern Star Resources Ltd and Bodie Investment Group Inc 21/3/19 Board Representation; Remove Director/Withhold Votes -2.71 $1.8M 8.6 Success
AWY Australian Whisky Holdings Ltd Quality Lifestyle Support Pty Ltd 18/3/19 Board Control; Remove Director/Withhold Votes; Board Representation; Management Changes -22.14 $50.9M 10.1 Partial Success
MXR Maximus Resources Ltd Dr Michael Ruane 18/3/19 Board Representation; Remove Director/Withhold Votes -39.45 $1.6M 6.99 Ongoing
MYO MYOB Group Ltd Manikay Partners LLC 5/3/19 Oppose Merger (Target); Sale of Company; Strategic Review -0.95 $1.4B 9.99 Unsuccessful
XIP Xenith IP Group Ltd IPH Ltd 12/2/19 Acquire Company; Oppose Merger (Target) 73.8 $88.5M 19.9 Success
FMS Flinders Mines Ltd Requisitioning Shareholders 11/1/19 Remove Director/Withhold Votes; Board Representation; Other 85.31 $70.1M 6.03 Ongoing
1AG Alterra Ltd Sandon Capital Ltd 12/12/18 Other; Acquire Company -24.83 $4.9M 18.6 Unsuccessful
HAV Havilah Resources Ltd Requisitioning Shareholders (Dr Keith Robert Johnson) 4/12/18 Remove Director/Withhold Votes; Board Representation; Remove Director/Withhold Votes -38.08 $30.4M 5 Success
SMR Stanmore Coal Ltd Golden Energy & Resources Ltd 19/11/18 Other; Board Representation; Return Capital/Buybacks; Remove Director/Withhold Votes 30.32 $153.3M 19.9 Partial Success
YBR Yellow Brick Road Ltd Mercantile Investments 20/08/18 Acquisition Attempt $31.5M Unsuccessful
AMP AMP Ltd Merlon Capital Partners Pty Ltd/Australia 27/10/18 Other; Board Control; Return Capital/Buybacks -19.2 $5.0B Unsuccessful
AOG Aveo Group Metrica Partners 24/8/18 Break Up -11.01 $956.8M Unsuccessful
GTY Gateway Lifestyle Challenger Boutique Choice - Perennial Value Management Australian Equity Fund 13/6/18 Sale of Company 16.73 $422.1M 9.4 Success
HT1 HT&E Ltd Viburnum Funds Pty Ltd 26/4/18 Strategic Review; Break Up 15.43 $519.1M Success
WTP Watpac Limited Sandon Capital Ltd 26/3/18 Strategic Review; Other; Board Representation; Management Changes; Break Up 11.69 $107.0M 3 Partial Success
CCX Specialty Fashion Group Ltd Sandon Capital Ltd 28/2/18 Other; Other 553.6 $35.2M 3 Unsuccessful
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Meanwhile, among global large caps (all stocks globally with market capitalisations above US$500m), 187 companies were targeted.

While this was down on 2018’s number, Lazard noted a record number of investors launched campaigns, including 43 “first timers” with no prior activism activities. This was nearly double the number from two years ago.

Japan became the most targeted jurisdiction (other than America) for the first time.


They’re on the march globally too

Lazard shareholder advisory practice managing director Dennis Berman said investor activism was on the rise to the extent that the very nature of share ownership was changing.

“This is a somewhat remarkable growth rate, and lays bare some of my earlier observations that the very nature of share ownership is changing,” he said on LinkedIn.

“There is grist to the idea that to be an actual human selecting actual stocks in the year 2020 pushes owners to be an ‘activist’.

“It’s even interesting to think that over the next decade the term ‘activist’ will disappear, and will be subsumed into the generic term ‘shareholder.’

“It calls to mind great retronyms such as horseless carriage, film camera and ground warfare.”

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