What the Banks Stock Rally Says About Wall Street

Meanwhile, Tesla short sellers have returned, said Ihor Dusaniwsky, managing director at S3 Partners, a data provider. In the 30-day period through Oct. 10, he said, Tesla shares fell 25.6 percent while the short interest grew by about 14 percent. “We saw 8.63 million shares of new short TSLA selling” in that period, he added.

Activists are back, and they want change

Turbulent periods for the markets aren’t usually regarded as the best times for activist investors, the hedge funds that buy stakes in companies with the aim of forcing changes in corporate strategy, like selling businesses or doing stock buybacks.

But based on the packed crowd at the 13D Monitor Active-Passive Investor Summit in New York City on Tuesday — where the lines for coffee and macarons were scores deep with hedge fund executives, investment bankers and corporate lawyers — the business of activism is hotter than it has been in years. “I had to come late to the conference because I was so busy,” Darren Novak, JPMorgan Chase’s head of shareholder engagement and MA capital markets for Europe, the Middle East and Africa, told DealBook.

Big-name activists are taking on corporate giants again. Third Point’s Dan Loeb disclosed in an investor letter that he had bought a stake in the consumer products giant Colgate-Palmolive, with an eye to persuading it to spin out its pet food business. And Starboard’s Jeff Smith publicly took aim at Salesforce at the conference, declaring that the company had a “subpar mix of growth and profitability.”

Activist investors are seizing their moment. While volatile markets are often seen as bad for the kinds of moves that these hedge funds recommend, attendees at the conference see a plethora of undervalued companies to push. They’re also benefiting from a securities rule change that requires companies to adopt universal proxy cards, making it easier for hedge funds to propose directors for shareholders to vote on.

“Periods of rising tides hide a lot of problems,” said Caitlin McSherry, director of investment stewardship at Neuberger Berman. “When the tides go out, you start to see more problematic situations expose themselves. And we are looking to take advantage of those situations.”

Article source: https://www.nytimes.com/2022/10/19/business/dealbook/banks-stock-rally-wall-street-goldman-sachs-morgan-stanley.html