Activist Investors Stir the Pot at Paramount Global, FIGS, and More

In the ever-evolving landscape of the stock market, activist investors have emerged as a significant force, shaking up companies and driving change. Paramount Global, the parent company of CBS, MTV, and other networks, is the latest target, with activist investor Barington Capital Group L.P. calling for an end to exclusive talks with media mogul David Ellison and urging the company to consider rival proposals. This move comes amidst speculation that Paramount could be a target for an activist investor as it weathers intensified investor scrutiny on the back of its Q1 earnings.

Barington, which owns a small stake in the film and TV giant, objects to the reported terms of a deal being considered with Ellison, citing concerns about the potential premium for Redstone's control of Paramount through National Amusements, which could siphon value away from other shareholders. The activist investor has called on the company to end its exclusive talks with Ellison and consider alternative proposals, including one from Apollo Global Management Inc.

This is not the first time Paramount Global has faced activist investor pressure. In the past year, major Paramount shareholder and billionaire stock magi Warren Buffett commented on the company's dividend cut, stating, "It's not good news when any company cuts its dividend dramatically." Additionally, Paramount chairwoman Shari Redstone bought $2.5 million in company stock at a 52-week low, signaling her confidence in the company's future.

Other companies have also felt the heat from activist investors. In the case of FIGS (FIG), activist investor Legion Partners called for the replacement of the company's CEO and board members, citing concerns about the company's growth strategy and stock performance. In response, Figs launched a strategic review, announced a new CEO, and appointed new board members, including some recommended by Legion Partners. As a result of these changes, Figs' stock price has rebounded, and the company has seen improved operational performance.

Bed Bath & Beyond (BBBY) is another example of a company facing activist investor pressure. In 2022, activist investor Ryan Cohen, co-founder of Chewy, took a 9.8% stake in the company and called for a strategic review and operational changes. The company appointed a new CEO and board members, including Cohen, and implemented a turnaround plan focused on improving the customer experience, enhancing digital capabilities, and optimizing the store portfolio. As of early 2023, Bed Bath & Beyond has seen improved stock performance and operational results, although the company continues to face challenges in the competitive retail landscape.

GameStop (GME) is another company that has faced activist investor pressure. In 2021, activist investor RC Ventures, led by Ryan Cohen, took a 9.9% stake in the company and called for a strategic review and operational changes, including a focus on e-commerce and digital transformation. The company appointed Cohen as chairman and implemented a turnaround plan, including the hiring of a new CEO and the closure of underperforming stores. GameStop's stock price has seen significant volatility, with a massive short squeeze in early 2021 followed by a decline in late 2022. However, the company has made progress in its digital transformation and has seen improved operational performance.

These examples illustrate how companies have reacted to activist investor pressure, with outcomes varying depending on the specific situation and the effectiveness of the implemented changes. In some cases, activist investor involvement has led to successful turnarounds, while in others, the results have been more mixed or uncertain.

As activist investors continue to make their presence known in the market, companies must be prepared to face their demands and adapt to the changing landscape. By staying informed and proactive, companies can better navigate the challenges posed by activist investors and emerge stronger in the long run.