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Goldman Activism Head Says Companies Face ‘Swarm’ of Agitators
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Avinash Mehrotra, Goldman Sachs
global head of activism and defense, discusses how large-cap companies are
facing a “swarm” of activists. He speaks to Bloomberg’s Ed Hammond and
Romaine Bostick.Source:
Bloomberg |
By
Xinyi Luo and
Ed Hammond
February 14, 2023 at 4:58
PM EST
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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