Sector specialization helps activists identify ideas, issue recommendations and improve their credibility when engaging with corporate executives and directors, explained Sagar Gupta, portfolio manager at Anson Funds Management LP.
“Having deep industry knowledge enables you to spot ideas faster and helps you generate a high-quality set of recommendations to create value and newer and creative ideas because you know the space,” said Gupta, who oversees the building out of Anson’s activism strategy, on the 100th Activist Investing Today podcast.
“If you have a strong record in an industry, you have a lot of credibility with the issuer because they can see what you’ve done at their peers. Your engagement will move along faster and be more effective even with a small position size.”
Gupta, who specializes in the technology, media and telecom sector, also discussed Anson’s investments and campaigns at Twilio Inc. (TWLO), Globalstar Inc. (GSAT) and Lionsgate Studios Corp. (LION).
Gupta said the bigger activists may appear to be generalists, but they have sector specialists in their ranks. “Most activists are making large, concentrated investments, so if you are coming into a brand-new sector, there is a higher chance you will miss a risk and lose a lot of money.”
Specialization, he explained, means having a strong network within those industries, which includes executives, director nominees, private equity firms, bankers, consultants and lawyers. Anson, which has $1.9 billion in assets under management, could expand its activism efforts to other sectors over time, Gupta explained.
“We’d like to build up that same expertise and network in healthcare, for example, and within Anson we have a real estate investment team that has tremendous experience and connections, and we may see some collaborations there,” he said.
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