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Alternative Market Briefing

The impact of COVID-19 on activist investing

Friday, May 01, 2020

Bailey McCann, Opalesque New York:

Activist investing could drop to levels not seen since 2014 in the immediate aftermath of the coronavirus outbreak, according to new research from Activist Insight.

Data in the report shows that there was a significant uptick in proxy statements in 2009, 2017, and 2019 following periods of falling stock prices. The increase in proxy filings during those periods suggests that activists may be gearing up for a series of fights over the next few years. Businesses appear to be positioning themselves more defensively ahead of any action. Companies have responded to this year's volatility by implementing so-called "poison pills," including as many as 40 by April 21. Firms are also changing their bylaws in response to the current environment.

Social distancing may end up saving some companies from proxy filings. The report notes that holding annual meetings in person is going to be difficult until there is a vaccine or treatment for COVID-19. Without an annual meeting, it becomes that much harder to launch a proxy fight. Shareholders may also be less focused on proxy issues overall if they are dealing with virus response and may be more inclined to side with management if management says it is dealing with special circumstances as a result of the crisis.

For activists to make it through the crisis, the report suggests that they'll have to bring especially high conviction cases to be seen and heard. Or, they will have to be......................

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