Analysts ponder whether activist fund Elliott is more in need of a ‘shake-up’ than the firms it invests in
Activist investor Elliott has ramped up its pressure on UK businesses this year, taking on builder Taylor Wimpey, pharmaceuticals firm Glaxo Smith Kline, and energy giant SSE.
It took a sizeable top-five stake in SSE in September and last week wrote a ten-page letter to the firm’s chairman Sir John Manzoni criticising the firm’s CEO Alistair Phillips-Davies, and calling on the energy company to split its renewables operations from its historical business.
But Elliott’s pressure on SSE prompted a backlash last week from its largest shareholders, including the likes of Royal London, who pushed back against its desire to split the company.
And now, analysts with less of a personal interest have begun to express doubt in Elliott’s strategy, asking “has it lost its touch, or at least fallen
out of step with the market?”
“More broadly Elliott could be seen to be out of sync with investor thinking on ESG issues,” analysts at Pensions & Investment Research Consultants (PIRC) wrote in a note yesterday.
“SSE has demonstrated its commitment to renewables and is seen by a number of investors as one of the more advanced companies in relation to the
Just Transition.
“Were the two sides of SSE to be split, this could reduce the incentive to continue such retraining and steady transition.”
It comes two months after Elliott’s London office head Gordon Singer dramatically gatecrashed a GSK virtual meeting, questioning its CEO Dame Emma Walmsley’s leadership and the company’s share price.
The hedge fund has a reputation for taking a no-prisoners approach to forcing shake-ups. Elliot took a multibillion pound stake in GSK earlier this year and called for a sale of its consumer business this summer, rather than a spin-off.
Elliott also called for a process to select the next boss of ‘New GSK’, the remaining biopharma arm.
However, the fund failed to win over other investors, and GSK said Walmsley would stay on as chief executive.
“It wants to break up major companies but won’t commit to some reporting about its own operations. It all feels a bit too much like Elliott is still using the
1990s playbook for activist campaigns,” the analysts at PIRC wrote, claiming that the firm’s Stewardship Code statement on its website uses “boilerplate blah” that replicates “dozens” of other hedge funds.
“At the time of writing it has failed in its attempts to make GSK chief exec Dame Emma Walmsley reapply for her own job,” the note continued.
“Another damp squib at SSE may lead the market to ponder whether it’s Elliott itself that needs a shake-up.”
Now that Elliott has three large FTSE 100 campaigns on the go, its reputation has never been more under the spotlight.