Activist investing seems to be growing as a theme again. In recent months we’ve had action involving GlaxoSmithKline and there looks to be the potential for an investor to put pressure on the two London-listed tobacco stocks, British American Tobacco and Imperial Brands.
Now insurance is also a target, with activist investor Cevian Capital taking a 4.95% stake in Aviva, says Russ Mould, investment director at AJ Bell.
“One might initially think this is an odd move, given that activists often push for asset disposals and Aviva has just finished a big spate of selling international operations. However, Aviva is also sitting on a large amount of cash from these sales, and it appears that Cevian wants the insurer to be generous with cash returns to investors and to make deeper cost cuts.
“This news, together with a positive update from British American Tobacco, helped drive the FTSE 100 up 0.2% to 7,094. This more than offset weakness from miners, industrials and energy stocks.
“Oil retreated 0.8% to $70.95 per barrel as the market continued to digest yesterday’s figures that showed a drop in oil imports by China as the country relied more on inventories. That has fuelled concerns that the global economy may not be in as strong a position as previously thought.”