Reach out and grab a falling knife, or wait until it lands? For active fund managers, that is the calculus being weighed amid the steepest market drops since the 2008 Financial Crisis. The coronavirus-driven market rout is serving as a deterrent to activist hedge funds, according to Sidley Austin’s Kai Liekefett and Derek Zaba. But Andrew Freedman, of Olshan Frome Wolosky, says he doesn’t buy the poison pill argument, saying his clients are not retreating to the sidelines. Regardless of where you land on this debate, the investor landscape has dramatically changed and we are in the throes of a market swing that the world hasn’t seen since Lehman’s bankruptcy. Buckle up.
One area of activism/corporate governance where COVID-19 is, no doubt, having an impact: annual meetings. Reuters reports that the virus has prompted a long list of companies to move their annual general meetings online. Virtual AGMs are not new, and their place in corporate governance comes with several debated pros and cons (less travel for PMs, less confrontation for boards). But this year, shareholders upset about not being able to face management in the flesh are fighting an uphill battle given the health concerns.
Buried in the market mania this past week is a public row that only corporate governance wonks would love: Harvard’s Lucian Bebchuk vs. Wachtell’s Marty Lipton on the issue of shareholder primacy and whether a company’s purpose should be serving the common good or not.
Have a great weekend,
Mike
