According to the recently published Global Institutional Investors Insight survey, shareholder activism is on the rise. The survey, which canvassed over 500 institutional investor and sell-side research analysts from across North American, European and Asian markets, reports that more than three quarters (77%) of those surveyed believe that activism levels will increase in the coming three years and become more prevalent worldwide.
The survey also highlights the four most prevalent factors that investors evaluate when considering whether to invest in a company:
- Good track record in meeting earnings expectations (65% of investors).
- An equity story that is clearly defined (58% of investors).
- A demonstrable link between the compensation of directors and company performance (54% of investors).
- High quality investor relations team (51% of respondents).
Most interestingly, the survey outlines a number of key market distinctions investors in different regions consider when investing, including:
- European investors place more importance on the degree to which director compensation aligns with corporate performance when compared to their U.S. investors — 62% in Europe versus 42% in the U.S.
- Asian investors tend to place higher importance than their North American and European counterparts on the following factors: sufficient sell-side coverage (62% versus 33% globally), management visibility at sell-side events (56% versus 39% globally), a dedicated investor relations function (67% versus 51% globally), management one-on-ones (61% versus 45% globally) and a digital footprint (54% versus 39% globally).
- 77% of investors in Asia note that a digital and social media presence is important to driving a company’s valuation, compared to 40% for European investors and 49% for US investors.
- European investors tend to have more diverse portfolios holding up to twice the number of stocks held than their Asian or North American counterparts.
- 63% of North American investors surveyed said they hold more than ¾ of the same stocks today that they held in 2013. In Asian markets, it is less than 10%. Over a five year holding period, 30% of North American investors had retained over half of their portfolio holdings, versus 26% in Europe and 1% in Asia.