It isn’t just the falling oil price that big energy companies have to worry about.
They might just have activist investors beating down their door before long too.
That’s according to a joint report from FTI Consulting and Activist Insight that takes in the views of 24 activists that have participated in 1,200 campaigns.
52% of respondents to the report said the energy sector is filled with “significant” opportunities, more than any other industry.
The report said [emphasis ours]:
Most respondents (totaling 44%) identified Energy as the sector that is most undervalued, yielding added opportunity for gains. In contrast, 35% of investors identified Healthcare as the most overvalued.
It is perhaps unsurprising then that the sectors seen as most promising for shareholder activism are Energy and Industrials. Likely because of depressed valuations, Energy is seen as an area for opportunity. Although there has been quite a bit of activism in the Industrials space, Energy activism was at a low in 2015 as commodity price issues negatively impacted the industry. It appears that activists are ready and waiting for signs of growth in this sector before beginning to engage.
That suggests that as soon as oil prices stabilise or show some signs of moving higher, activists might be ready to pile in. Still, it will likely be a challenge to find winning bets in the sector.
“A lot of companies in that space are already distressed,” Ele Klein, partner with Schulte Roth & Zabel, told Business Insider. “There’s no easy fix for that.”
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