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Case Studies


In July 2017, Breakingviews wrote that French food and dairy giant Danone could be the next serving for hungry activist investors, with low operating margins and lackluster stock performance leaving management vulnerable to an investor campaign. A month later, it emerged that Keith Meister’s hedge fund Corvex Management had bought shares worth $400 million in the yoghurt group with plans to push the company to improve its returns.


Told you so

Ahead of Snap’s $3.4 billion initial public offering, Breakingviews argued that investors had “given up giving a damn”. They handed their money over to an immature company and in the process abrogated their rights to fair treatment, good governance, and reasonable valuations.” As the piece foreshadowed, after popping on their first trading day, Snap’s no-vote securities steadily declined, falling by nearly 50 percent from their peak to below their offering price a few months later. As Breakingviews editor Rob Cox wrote: “shareholders have only their capitulated selves to blame”.


Mining for Ideas

Breakingviews correctly predicted that Glencore would emerge stronger in 2016 from the slump in commodities prices and that its chief executive officer Ivan Glasenberg would be the last man standing among corporate leaders in the mining industry. Both Glencore’s major rivals were forced into management reshuffles while Glencore’s shares gained 325 percent last year.


Unearthing value

In December 2015, Breakingviews argued that Caterpillar’s executive team was vulnerable, making the company a ripe target for activist investors. Within 10 months, Caterpillar’s chief executive stepped down amid investor pressure. During that time, shares of the machinery maker rose 31 percent, outperforming the S&P 500 Index by nearly ten times.



In October 2015, Breakingviews delved into the lack of transparency surrounding Alibaba’s logistics business. “Even as delivery becomes increasingly important, Alibaba shareholders can only guess at how much it costs,” Robyn Mak wrote. The following May, the Chinese e-commerce giant said the U.S. Securities Commission was investigating its accounting practices, including at its logistics network. Shares in the U.S.-listed company fell almost 7 percent. Readers who followed Breakingviews’ coverage of Alibaba were forewarned.



Breakingviews emerged as a leading voice in defending shareholder democracy in Hong Kong in 2015. In June that year, the Hong Kong stock exchange proposed changes to its listing rules that would allow companies to issue multiple classes of shares with different voting rights. The move was designed to apply only to larger companies, which would have to accept other protections. But Breakingviews criticized the plan, arguing it “jeopardizes Hong Kong’s position” as a bastion of free-market capitalism in Asia. Three days later the Securities and Futures Commission rejected the draft proposals, preserving the principle of one share, one vote.


Told you so

On February 25 2016, Breakingviews was a dissenting voice as Lloyds Banking Group unveiled a 0.5 pence special dividend and shares climbed 9 percent. Breakingviews columnists instead focused on a delayed return-on-equity target that indicated the UK lender was worried about lower-for-longer rates. Lloyds in July said it was cutting its forecast of 2 percentage points of annual capital generation to 1.6 percentage points, undermining bullish investors’ dividend hopes. Between the end of February and the end of June, Lloyds shares fell 32 percent – a loss Breakingviews readers could have avoided.


Alpha generative

On June 4, 2014, Breakingviews wrote: “A Gannett breakup is really just a matter of Time.” The column was written days before Time Warner spun off its Time Inc publishing division, and suggested that $10 billion rival Gannett should follow by splitting its TV and newspaper divisions to increase shareholder value. The company’s shares went up by nearly a fifth compared to a flat S&P 500 Index over the next two months before Gannett announced in August it would spin off its publishing business.



On Dec. 15, 2015, Breakingviews wrote that China’s Haier would consider buying General Electric’s appliance business, after a planned $3.3 billion sale to Electrolux of Sweden collapsed. “Stepping into GE’s commanding position would be transformational for China’s Haier.” A month later, Haier agreed to buy the century-old business for more than $5.4 billion – far more than GE investors anticipated.


Way ahead

On Sept. 17, 2015, Breakingviews wrote that China’s two top ride-hailing services could end their capital destructive ways by joining forces. “China’s car-app war could end in a ceasefire” and “create substantial value.” Nearly a year later, on Aug. 1, 2016, the sale of Uber China to Didi Chuxing was announced, creating a $35 billion giant in one of the year’s most significant tech deals.


Drilling deep

As U.S. natural gas producer EQT fought to persuade investors of the logic behind its $6.7 billion plan to buy rival Rice Energy in August 2017, Breakingviews wrote that the company was going too far with its synergy projections and questioned whether the executive compensation plan might be a factor in its acquisition strategy. Soon after, activist investor Jana Partners cited the column in a letter to EQT’s board as part of its campaign to stop the deal.

Column: https://www.breakingviews.com/considered-view/eqt-drills-too-deeply-to-sell-its-rice-deal/

Jana letter: https://www.sec.gov/Archives/edgar/data/33213/000090266417003287/exhibith.htm