Activist investing is at an all-time high and large companies are particularly vulnerable to packs of agitators that may not even have the same agenda, according to one of Goldman Sachs Group Inc.’s top dealmakers.
(Bloomberg) — Activist investing is at an all-time high and large companies are particularly vulnerable to packs of agitators that may not even have the same agenda, according to one of Goldman Sachs Group Inc.’s top dealmakers.
“We used to refer to this as a wolfpack — wolfpack implies some kind of coordination,” said Avinash Mehrotra, global head of activism defense and shareholder advisory at the New York-based bank, said in an interview Tuesday on Bloomberg TV. “You’ve got an environment right now where you are seeing more of a swarm at large-cap companies. Some of these activists are pushing companies in different directions.”
So-called large-cap companies have become the focus for activists because they are viewed as “defensive,” or a safe place to put money, in a “volatile” economic environment, Mehrotra said. There are also more activists than ever before and only so many very large companies to target, he added.
Large companies with multiple activists in their stock at the moment have included Salesforce Inc. and Fidelity National Information Services Inc. among others. When grappling with a swarm, companies have to focus on who they are dealing with as some activists have more sway than others, Mehrotra said.
“When we are advising our clients, we’re very focused on not just what the attack is but who it’s coming from,” he said. “The identity really determines whether you can carry the rest of the investor universe with you.”
Technology companies have been particularly ripe for shareholder activism at the moment because the industry’s headcount swelled during the pandemic.
“The tech sector itself has expanded its headcount more since Covid than really any other sector,” he said.
Tech names have also become a target as investors shift their focus from growth stocks to so-called value stocks, or those trading at attractive prices, he added.
Tech isn’t the only sector grappling with these issues, Mehrotra said.
“Our expectation is this is going to spread, because this basic idea of back to profitability, back to margins—this applies not just to tech, it applies more broadly,” he said.
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