We wrote a few days ago about the spread of investor activism that ultimately may have forced the Amazon/Whole Foods betrothal – pressure from an activist, Jana Partners, who ultimately benefited richly from the bid price. The shock (to some) decision by Travis Kalanick to step down as chief executive of Uber Technologies earlier this week was actually the result of agitating by another kind of activist – venture capital backers. It seems that the problems that had recently beset Uber – sexual harassment investigation, allegations of unscrupulous treatment of drivers and skirting of regulations – some of which, at least, may have been factors in its growth and disruption – were perceived as being likely to taint the reputation of the venture capital backers.
This may well be a watershed event in terms of the limits of corporate scruples, aggression in the pursuit of market share, the nature of true leadership, the importance of corporate “reputation” and the contagious effects of perceived transgressions. It is particularly interesting in light of some of the “anti-political correctness” that characterized last year’s presidential election campaign. As we push towards enhanced “ESG” characteristics across all of our investments, this is an intriguing development as it spells out, in sometimes mortifying detail, the true characteristics of what is good governance. For those of us (institutional investors) who are committed to furthering greater ESG awareness it is a salutary development.
Oil continued to gyrate as the week passed – recovering a $45 price level having hit official “bear market” levels earlier in the week (a drop in more than 20% from peak levels). The day ended with a focus on US large banks as the first round of stress test results were released by the US Fed. The largest banks were deemed to have “significantly bolstered their defenses since the 2008 crisis” and were deemed to be healthy and potentially fit for a deregulatory shift. It is a further sign of the greater prudence in evidence in the sector – following an effective exit from prop trading and side businesses such as hedge funds and private equity.