Daily Activist Investing May 28: Teaching tech companies about activism

Activist lovers, activist-related stories and news for May 27 set up below - as usual the free newsletter is on a 24-hour delay; Activist Strategy subs only ones getting it on publication day. Still taking leads at @activiststocks, daily newsletter sign up is here and check out past newsletters.

News-

  • Shutterfly posts its own presentation in response to Marathon Partners' [link to presentation]

  • Orange Capital ups its stake in Bellatrix Exploration to 16.4%. They’ve more than tripled their stake since going active in August.

  • Vector Capital is active on Egain with a 7.7% stake. No plans yet [link]

  • Not an activist position, but SPO Advisory tripled its stake in Laredo Petroleum and now owns 6.4%.

Stories-

  • @vipalmonga pens a piece for the WSJ on how capital spending is down and buyback spending is up, fueled by pressure on companies by activist investors. Of note, “At S&P 500 companies targeted by activists, the spending cuts were more dramatic. Targeted companies reduced capital expenditures in the five years after activists bought their shares to 29% of operating cash flow, from 42% the year before” [link]

  • @AB_insights has a piece on thinking about activism as a debt holder. Key takeaway, “Simply put: activists’ policy proposals are designed to enhance equity returns, often at the expense of a company’s overall credit quality. For instance, companies often finance share buybacks or dividend increases—two common activist investor demands—by taking on new debt” [link]

  • @ShiraOvide at the WSJ looks at how tech companies should defend themselves against activist investors, the answer? “To forestall such outcomes, Mr. Andreessen urges startups to mimic Facebook and Google Inc. by granting founders special types of stock that give them control over key decisions. He says that tactic will insulate the companies from outside pressures after they are public.” [link]