Video: How to research an activist shareholder

Activist investors have been behind several of this proxy season’s more hotly contested proxy fights, and FTI Consulting data shows there were 722 activist campaigns in the US and Canada last year (CorporateSecretary.com, 2/24). With that in mind, Olshan Frome Wolosky partner Steve Wolosky recently spoke with Corporate Secretary sister publication IR Magazine about trends in shareholder activism and how companies can defend themselves.

‘Investors have different styles and activists have different styles,’ Wolosky says in the video interview (see below). ‘There are some for whom a proxy contest is a last resort and there are others who believe using a proxy contest as a means to get a mandate from shareholders is a very important technique. Knowing who you’re dealing with is vital.’ He recommends companies start by looking at the activists’ track record by focusing on other 13D filings they have made.

Wolosky outlines questions he says companies should research: ‘What happened when [the activist] first became public? Did the stock move or get a bump? When did the activist get out of the position? What is the quality of the activist’s candidates, if it ran candidates? Who are its advisers and what are its styles?’ 

He also advises that companies should be aware of how activists are using social media, which has made it much easier for activists to communicate with other shareholders during a contest. ‘When I started doing proxy contests 30 years ago, you had to do a mailing to shareholders or hope a newspaper published an article,’ he says. ‘Now you can tweet, [go on] Facebook and you set up a website that can receive inbound questions and concerns from shareholders.’