Wall Street activism is proving its influence on corporations. Just look at Disney's Bob Iger.
Good morning, Opening Bell crew. I'm Phil Rosen, reporting from Manhattan. We're 48 hours from turkey day, but markets are humming along just fine.
Investors are still digesting the news that Bob Iger will reprise his role as the chief executive of Disney. The guy retired for less than a year and he's already back, and under his watch, onlookers expect some of the brand's old magic to return.
Great storytelling, of course, doesn't just mean more chances for adults to cry in movie theaters — it also means higher share prices for investors, as well as the end of ex-CEO Bob Chapek's feuding with others inside the creative empire.
The important story for markets, though, is that Disney's changing of the guard also signals that some of Wall Street's activists hold an increasing amount of sway over corporate giants.
1. Investors are usually quiet and content when a company's stock goes up. There's often little to say when times are good.
But when share prices fall, as they have for most of this year, investors tend to be much louder critics.
On Sunday, Disney announced legendary leader Bob Iger would return to his post as CEO and replace Bob Chapek, even though Chapek just months ago signed a contract extension.
Disney stock had plunged 21% since Chapek's appointment in February 2020. On Monday alone shares climbed 9% when markets got word Iger was at the helm once again.
As senior reporter Matt Fox writes, it is yet another example of the wider trend of investors demanding greater efficiency this year as the stock market swoons.
Earlier this year, activist investor Dan Loeb of Third Point bought a $1 billion stake, and struck a deal to add a member to Disney's board. Now, the creative stalwart is facing pressure from Trian Fund Management's Nelson Peltz, who bought a $800 million stake this month, to make further adjustments.
But Disney isn't alone in feeling this pressure from activists. This year's bear market has sparked a wave of activist investors throwing shade and demanding changes at corporate giants ranging from Meta to Salesforce.
Altimeter's Brad Gerstner sent Mark Zuckerberg a letter with a list of items that could improve the company, in his view. It included a headcount cut of at least 20% — and Meta has since announced a 13% workforce reduction.
Even Google parent Alphabet isn't immune to these pressure campaigns. TCI Fund Management, a major investor in the search giant, is demanding CEO Sundar Pichai greatly slash headcount to improve operating efficiency, and has also called for an "aggressive buyback campaign."
As long as these headwinds batter the stock market, investors are likely not going to sit idly by and watch what they believe to be mismanagement by corporate leaders. Stay tuned.
In other news:
2. US stock futures rise early Tuesday in the subdued rundown to Thanksgiving. Meanwhile, an EU ban on most Russian crude is still two weeks away — but Northern Europe has already slashed Russian imports by 90%. Here are the latest market moves.
3. On the docket: HP, VMware Inc., and Best Buy, all reporting.
4. Investors can use this strategy to play it safe for the next three to six months, and UBS said that would set them up for a decade of strong performance. Big gains are possible after mid-2023, analysts said, as inflation and interest rates trend lower. Dig into their market breakdown.
5. The US economy can still stick a soft landing so long as these critical developments take shape. Goldman Sachs laid out how the Fed can steer the economy away from a recession, but warned that there is still risk ahead. Here are the four steps that need to happen next.
6. Wharton professor Jeremy Siegel forecasted that stocks can surge 20% next year. In his view, the Fed will acknowledge falling inflation soon, and that will leave stocks poised for a spike: "I think finally the Fed will say, 'you know what, on the ground things are all declining and we got to think about that.'"
7. Europe is loading up on Russian diesel before an import ban kicks in on refined fuels. An EU embargo is set to begin in February, and buyers across the continent are starting to show signs of hoarding supplies. Get the full details here.
8. "There's more opportunity now than in the last 10 years." That's what this real estate investor said, and he has a portfolio with 178 units. These are his four pieces of advice for beginners looking to get started in the market.
9. Morningstar said to buy these stocks that are on their way to recovery right now. Wall Street thinks the holiday season might be grim for retailers, but this firm's top strategists have picked out which stocks look far too cheap. See their list of 26 names here.
10. Oil plunged Monday on reports that OPEC+ is weighing a boost in production. A possible 500,000 barrel-per-day increase would mark a reversal in the previous decision to cut crude output. Prices showed signs of recovering Tuesday, but Monday's news saw them hit their lowest point on since January.
- A Google employee of 11 years says he and his wife stared at each other in 'disbelief' when they realized they'd both been laid off by the company
- A Google engineer of 8 years says his 'spidey-senses' detected incoming layoffs — and felt 'isolated' when his 'faceless' severance email arrived
- 6 signs that you're in a one-sided relationship and how to find balance
- Rajinikanth issues public notice on infringement of rights, warns legal action
- Govt likely to float global tender for HPV vaccine in April; Merck, Serum Institute may participate
- Finance Ministry to stick to privatisation of already announced CPSEs next fiscal
- 70-plus Indian startups show exit door to 21K techies, more pink slips coming
- Steps taken in subsidence-hit Joshimath inadequate, declare Himalayas eco-sensitive zone, say experts