Whatâs Going On Here?Reports out on Monday show activist investor Elliott Management has got its teeth into Salesforce. What Does This Mean?Poor old Salesforce has hit a slump. Sure, the firmâs not quite moping around in its PJs all day and eating Ben and Jerry's from the tub, but it has let itself go: growthâs gone all slack, and the companyâs market value has fallen to about half its 2021 peak. And now the down-on-its-luck firmâs caught the eye of activist investors â thatâs plucky financiers who buy chunks of companies to dust them off, spruce up operations, and ultimately boost share prices. Big-name Elliott Management has reportedly grabbed a multi-billion-dollar slice of the Salesforce pie, following in the footsteps of fellow activist Starboard Value, which claimed a stake in October. Thatâs going to pile a whole lot of pressure on Salesforceâs management team, an idea investors seemed to like: they sent the firmâs shares up when news broke. Why Should I Care?The bigger picture: Activismâs on trend.
Elliottâs stake in Salesforce is part of a new wave of activist investing thatâs sweeping hard-hit global markets. Case in point: by Bloombergâs count, a massive 177 activist campaigns were announced last quarter â the most since 2018. And weâre not just talking about small fry: along with Salesforce, other giants like Disney and Bayer have been targeted in recent months too.
Zooming out: Unwanted attention.
Being courted by an activist investor is no bed of roses. After all, any activistâs main goal is to boost shareholder returns â and that doesn't always mean improving the companyâs fate in the long run. In fact, research shows that a companyâs value tends to spike the year after itâs targeted, only to drop off compared to its âuntargetedâ peers over time. And thatâs not to mention the fact that activists tend to nix companiesâ long-term investments and efforts at corporate responsibility⊠| 