Shareholder activism in Canada declines sharply

The number of Canadian firms publicly targeted by activist investors in the first quarter of 2019 is down 43 percent on the same period last year.

Whereas Q1 2018 saw 32 firms come under attack by activists, data from Activist Insight shows that just 18 were the subject of a campaign in Q1 2019.

‘Activism has slowed in Canada this year, partly because mining stocks have rallied after last year’s bear market and begun to address their weakness through M&A,’ Josh Black, editor-in-chief at Activist Insight, tells Corporate Secretary sister publication IR Magazine.

But he adds that ‘acceptance of activism as a tool seems to be spreading throughout the investment world and last year’s record number of companies targeted suggests it will not go away.’

Black says Activist Insight’s data suggests that the end of 2018 was ‘fairly busy’ in Canada, providing a possible explanation for the dip at the start of this year.

In terms of what activists want from the Canadian companies they have targeted so far this year, board-related campaigns remain the most popular, accounting for 41 percent of campaigns in Q1, although that is down from 48 percent on the same period last year. This is followed by ‘other governance’ issues at 28 percent (up 2 percentage points on Q1 2018) and 10 percent for the next-most popular activist focus: remuneration (down from 14 percent).

But it’s not just in Canada where things have calmed down. Activist Insight’s report states that ‘Q1 2019 was the quietest quarter to an opening year by number of companies publicly subjected to activist demands since 2015,’ adding that ‘the number of companies publicly facing impactful campaigns in Q1 fell to its lowest since 2014.’

Regionally, there is a mixed bag. For example, although activists remain most active in the US, with 189 companies targeted publicly in the first quarter of the year, this is a drop from Q1 2018 when 227 companies were targeted and the US saw its busiest quarter in five years.

Highlighting just how drastically different the situation is in the US, Australia became the second-busiest country in terms of activism with just 25 companies publicly targeted by activists. After a Q1 2018 record high of 34 campaigns in Asia, the tally in Q1 this year has fallen back to 21.

Activist Insight’s overview of the quarter also notes that the UK had its busiest Q1 in recent years with 17 campaigns, while European firms overall saw their lowest levels of activism since 2014.

Elsewhere in Q1 2019, Portugal and Russia each recorded their first public activist campaigns in recent years.