Tuesday, February 3, 2009

OTPP, Petro-Canada and "Activitst" Shareholders

Activist Shareholder:
"A person who owns one share of stock, comes to shareholder meetings and wastes time by asking company executives silly questions."

Certainly a cynical definition of an activist shareholder, this is probably the definition we are most familiar as a matter of experience.

However, occasionally, activitst shareholders can actually have the weight and expertise required to ask the right questions from a capitalist perspective. OTPP holds a large portion of Petro-Canada and is using its position to influence pressure on the management to improve performance. This case, it is particularly interesting because this is a clear example of when Private Equity will drive change in management behaviour. What is unique in this case is that OTPP, being one of the three largest PE firms in Canada, will be doing these actions in a relatively public forum as the nature of PE doesn't usually allow for outsiders to look in.

What action will be taken to correct the issues that Petro-Canada is suffering from is yet to be determined, but what is clear is that this will be an interesting case to watch over the next quarter.

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