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Illustration: Aïda Amer/Axios
Big companies have been cutting deals with activist shareholders, putting away the boxing gloves in order to dodge negative publicity, Axios' Courtenay Brown writes.
Why it matters: While some activists continue to make noise, the broader silence — and behind-the-scenes dealmaking — is more representative of what's really going on.
The big picture: With investors of all sizes pressing their agendas on public corporations — from hedge funds seeking to block mergers to issue-oriented shareholders pursuing social and environmental agendas — top executives have started negotiating upfront, aiming to reduce the number of loud confrontations and proxy battles.
American-style activism has caught on abroad and is rising in countries like the U.K. and Japan. But in the U.S., where investors first started building up stakes in companies and picking high-profile fights, the number of public showdowns is way down this year, despite some splashy exceptions.
Between the lines: In Q1, all of the corporate board seats gained by hedge funds were won via settlements, according to Lazard.
More proposals are being withdrawn, a recent trend that's expected to continue this year, according to ISS, a proxy advisory firm. This typically happens when a company and a shareholder group reach a truce behind closed doors.
The other side: This trend by no means spells the end of big, public battles.
There's been lots of activity on the ESG front, primarily among issue-oriented shareholders.
The S&P 500 rose 1% and closed at its highest level ever, while also touching an intraday record high yesterday, as analysts said traders were betting the Fed would cut U.S. interest rates this year.
Oil prices jumped, thanks to an escalating battle between the U.S. and Iran, punctuated by the Islamic Republic shooting down a U.S. military drone. That sent U.S. WTI crude futures up nearly 6%, the biggest one-day gain since December, while international Brent crude futures saw the biggest one-day increase since January.
The bottom line: Both risk assets saw major gains because of unequivocally negative news about the safety of the world and the economy. The Fed is considering cutting rates because global growth is weakening and oil prices are rallying because of the potential for an armed conflict between the U.S. and Iran.
As we reported yesterday, yields on government bonds across Europe, along with most of Japan, have fallen below 0, yet investors continue to buy them.
But why? The European Central Bank and Bank of Japan are expected to push official rates even further negative, driving bond prices higher and delivering returns for traders who plan to sell the bonds before they mature.
The former Smith & Wesson has seen its stock fall badly this year, but got a reprieve on Wednesday after it released its fiscal year 2019 earnings report.
What happened: The company didn't deliver great numbers, but they weren't as bad as feared, which made the stock's 25% decline so far this year look a bit overdone.
What they're saying: "Fiscal 2019 was a year that presented challenges for the firearms industry, including changes in the political environment and reduced consumer demand for firearms and for the accessories that are attached to them," said James Debney, AOBC's president and CEO.
The big picture: AOBC's stock has had a hard time since President Barack Obama left office, data provided to MarketWatch's Paul Brandus from the National Shooting Sports Foundation shows. Between 2008 and 2017:
Illustration: Lazaro Gamio/Axios
Not-for-profit hospital systems increasingly operate more like corporate titans on stock exchanges than the charities they promote themselves to be, Axios' Bob Herman writes.
The big picture: As hospital systems have gotten larger, they have hosted more investor calls, released more financial data and attended more conferences and roadshows to attract banks and municipal debt buyers — all while health care spending continues to soar.
Where things stand: Almost 60% of community hospitals are private and nonprofit, and therefore don't pay income or property taxes. But hospitals are more on par with pharmaceutical giants and insurance companies than soup kitchens.
The intrigue: Hospitals that want to erect new buildings or buy new technology issue debt in municipal bond markets instead of the public markets. And more hospital systems "increasingly are trying to sell themselves to investors as they expand and become more complex to ensure they get the best rates when they borrow," the Wall Street Journal reported in 2016.
The bottom line: "Not-for-profit" does not mean "no profit."