When activist investors take a major stake in a firm, things are bound to get rocky. We have five companies facing activist investors.

Simone Del Rosario Business Correspondent

Disney, Twitter among top companies fighting activist investors

Sep 16, 2022

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Emma Stoltzfus (Editor), Brent Jabbour (Producer)

When activist investors take a major stake in a company, the intent is to shake things up. Usually through specialized hedge funds, they flex their shareholder position to advocate for everything from firing CEOs to changing the focus of the business. Here are companies in the throes of activist investors in this week’s Five for Friday:

#5: Twitter

Twitter has been at the mercy of the world’s wealthiest person Elon Musk ever since he took a 9.2% stake in the social media giant in March. The SpaceX and Tesla CEO tried to alter the company’s direction through conversations with founder Jack Dorsey and was offered a seat on the board, but in the end he decided to use his billions to buy Twitter outright. Musk is now trying to back out of the $44 billion deal over the number of bots on the platform, but shareholders approved the deal. The two sides are now locked in litigation.

#4: The New York Times

In August, The New York Times became the target of ValueAct, a hedge fund with a portfolio worth more than $6 billion. In the past, ValueAct has taken significant positions in media companies like Reuters and 21st Century Fox. It’s demanding the newspaper aggressively push bundled subscriptions – that includes games, cooking, Wirecutter and The Athletic – to maximize profitability. The Times may need it too, its stock is down more than 30% so far this year.

#3: Chevron

An outspoken critic of environmental, social and governance investing, Vivek Ramaswamy took a stake in Chevron. He wrote a letter to the oil giant saying he wanted, “to liberate you from constraints imposed on Chevron by its ESG-promoting ‘shareholders.’” Ramaswamy is effectively calling on Chevron to pump more oil following oil companies facing pressure from shareholders to transition away from fossil fuels.

#2: Bed Bath & Beyond

Ryan Cohen, most known for co-founding Chewy and serving as chairman of Gamestop, bought up more than 7 million shares in Bed Bath & Beyond earlier this year. The man who has become an idol to meme stock investors dumped his 12% stake in the company in mid-August. The sale tanked the stock more than 40% in a single day, but Cohen walked away with $68 million in profit.

#1: Disney

It’s not easy for companies to come out of a tussle with an activist investor unscathed. Disney may be an outlier after defeating a challenge from hedge fund manager Dan Loeb, who tried to force the house of mouse to spin off ESPN. In the end, he said he was able to get a better understanding of ESPN’s business model and backed off. Disney isn’t out of the woods yet, though, as Loeb still has other demands.

Tags: Chevron, Disney, Elon Musk, Tesla, The New York Times, Twitter

SIMONE DEL ROSARIO:

WHEN YOU HEAR AN ACTIVIST INVESTOR HAS TAKEN A MAJOR STAKE IN A FIRM, YOU KNOW THEY’RE GONNA TRY TO SHAKE THINGS UP. WE’VE GOT COMPANIES IN THE THROES OF ACTIVIST INVESTORS IN THIS WEEK’S FIVE FOR FRIDAY.

TWITTER HAS BEEN AT ELON MUSK’S MERCY EVER SINCE HE TOOK A 9.2% STAKE IN THE COMPANY BACK IN MARCH. AT FIRST HE TRIED TO BEND THE COMPANY’S DIRECTION, THEN HE DECIDED, I’LL JUST BUY THE WHOLE THING. SHAREHOLDERS JUST APPROVED THE DEAL EVEN AS MUSK IS IN COURT TRYING TO BACK OUT. CAN SOMEONE SAY BUYER’S REMORSE? SHOULD HAVE JUST TAKEN THAT BOARD SEAT THEY OFFERED.

IN AUGUST THE NEW YORK TIMES BECAME THE TARGET OF VALUEACT, AN ACTIVIST INVESTOR WITH SIGNIFICANT STAKES IN MEDIA COMPANIES LIKE REUTERS AND 21ST CENTURY FOX. THE INVESTMENT FIRM IS DEMANDING THE NEWSPAPER MORE AGGRESSIVELY PUSH ITS BUNDLED SUBSCRIPTION SERVICE. NY TIMES STOCK IS DOWN MORE THAN 30% THIS YEAR.

AN OUTSPOKEN CRITIC OF ESG INVESTING, ACTIVIST INVESTOR VIVEK RAMASWAMY JUST TOOK STAKE IN CHEVRON TO
LIBERATE THE COMPANY FROM ITS ESG-PROMOTING SHAREHOLDERS, WHO HAPPEN TO ALSO BE MAJOR ACTIVIST INVESTORS. TALK ABOUT GETTING CAUGHT IN THE CROSSFIRE. RAMASWAMY WANTS CHEVRON TO DITCH THE ENERGY TRANSITION AND PUMP MORE FOSSIL FUELS.

AFTER BUYING MORE THAN 7 MILLION SHARES IN BED BATH AND BEYOND EARLIER IN THE YEAR, MEME STOCK GOD RYAN COHEN SOLD OFF HIS 12% STAKE IN THE STRUGGLING RETAILER. THAT SALE SANK THE STOCK MORE THAN 40% IN ONE DAY, WHILE COHEN WALKED AWAY WITH A $68 MILLION PROFIT.

COMPANIES RARELY WALK AWAY UNSCATHED WHEN AN ACTIVIST INVESTOR TAKES HOLD, BUT DISNEY JUST DEFEATED ITS CHALLENGE FROM HEDGE FUND MANAGER DAN LOEB, WHO TRIED TO FORCE THE COMPANY TO SPIN OFF ESPN. WHILE HE BACKED OFF THIS ONE, LOEB SAYS HE’S NOT GOING AWAY YET AND STILL HAS OTHER DEMANDS FOR DISNEY.

ACTIVIST INVESTOR SOUNDS LIKE A DIRTY WORD, BUT SOMETIMES IT’S WHAT IT TAKES FOR EXECUTIVES TO CLEAN UP THEIR ACT FOR THE SAKE OF SHAREHOLDERS. THAT’S YOUR FIVE FOR FRIDAY, I’M SIMONE DEL ROSARIO AND IT’S JUST BUSINESS.