Shareholder Activism                                                      Actionable Insights from Mathemactical Analysis

We help corporate secretaries, activist investors, or others involved in issues of corporate control, to make better decisions than the competition by looking at the correct measure of control – voting power – while everyone else has their eye on ownership. 

Voting power analysis reveals actionable information, such as, the influence of each shareholder and their odds of winning a potential proxy battle, which can guide key strategic decisions.

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Key Strategic Decisions
 

Target Selection

As Seth Klarman is fond of saying, most of the money is made with the purchase decision. A good targeting decision can make up for many other problems and mistakes. Shareholder Control Measurement is an incredible new tool for judging the chances of successfully influencing a company in a proxy battle. By only targeting companies at which you have a good chance of winning a proxy battle in the first place, you can dramatically reduce the occurrence of expensive proxy losses.  

Avoid Proxy Battles

In fact, the proxy battles themselves may be easier to avoid if you know and can demonstrate the odds of such a contest ahead of time. Being able to say “there is an 87.3% chance we will win a potential proxy battle” and having the calculations to back it up, could go a long way to making the other side more negotiable. In addition, if a large shareholder swings away from you, early in the process, the effect on a potential proxy battle can be calculated, thereby saving you fruitless proxy expenses. From the board’s perspective, a proxy battle may be avoided by offering a board seat, or seats with zero or negligible control.  

Accessing Options

Control Measurement helps the enterprising investor evaluate tactical moves and offered compromises based on their effect on a proxy battle. For example, investors can know the control value of any offered board seats, allowing them to recognize a mutually valuable compromise. Activists can also evaluate the effects of proposed changes in the ownership structure, like a large issue of new shares or a purchase of more stock, on the distribution of control, thereby guiding strategy. 

Winning Proxy Battles

 In the crucible of the proxy battle itself, control analysis is crucial for distributing resources. Control analysis will allow you to recognize key shareholders. E.g., in the case of Lions Gate, by surveying the terrain through the lens of Shareholder Control, we recognized that Smallcap World Fund carries just as much influence as Capital Research Global, despite much smaller ownership. On the small shareholder side, there is a massive opportunity to increase the efficiency of expensive contact efforts such as phone banks and direct mail, by tying the cost of efforts and frequency of contact attempts to each shareholders control value.