Hedge Funds’ New Approach to Shareholder Activism: Podcasting
From celebrities to politicians, it seems everyone has a podcast these days. Now, even hedge funds are branching out into the medium in an effort to grab the attention of shareholders. Earlier this week, Elliott Management, the formidable activist fund founded by billionaire Paul Singer, launched a podcast dedicated to its aggressive campaign at Southwest Airlines. Titled “Stronger Southwest,” the series is aimed at bolstering the firm’s efforts to enact leadership changes at the airline. The move is also part of a trend of shareholder activists seeking to be more media-savvy in their messaging.
Elliott revealed its 11 percent stake in Southwest in June and has spent the past few months pushing for a slew of changes at the airline, which has lost half of its market value in the past three years. In addition to urging Southwest’s CEO Bob Jordan and executive chairman Gary Kelly to step down, Elliott is looking to replace the airline’s board of directors with eight of its own nominees. On Oct. 14, it called for a December special meeting of shareholders to vote on its candidates.
The following day, Elliott released the first episode of ‘Stronger Southwest,’ which features conversations with the activist investor’s nominees. “Today’s launch of an innovative new podcast series will offer shareholders an opportunity to learn more about these uniquely qualified nominees,” said the fund in an Oct. 15 press release.
The first episode centers upon nominee Gregg Saretsky, whose career in the airline industry has included stints as CEO of WestJet and vice president of marketing at Canadian Airlines. “The things that we had to do in those days, with respect to taking a deep dive and looking really critically at aspects of our business, I think are things that very much need to happen today at Southwest,” said Saretsky during the 18-minute program. The episode has racked up nearly 3,000 views on YouTube and is also available on Spotify and Apple.
Southwest, for its part, has described Elliott’s demands as extreme and unnecessary. The fund’s call for a special shareholders meeting “appears designed to maximize disruption as we approach one of the busiest travel periods of the year,” said CEO Bob Jordan in an Oct. 15 video message. “This is not a fight ‘against Elliott.’ This is a fight for the future of Southwest Airlines.”
Will podcasts become the new norm in shareholder activism?
Elliott’s podcast is a “novel tactic” in investor activism, according to Kevin Kaiser, a finance professor at the University of Pennsylvania’s Wharton School. “That said, I think it is an excellent approach which will enable shareholders to hear from the nominees in advance of their vote,” he told Observer.
While ‘Stronger Southwest’ may be an unprecedented use of podcasting, it follows increasingly media-heavy strategies used by hedge funds. Elliott also has a website dedicated to its Southwest campaign, in addition to a 51-page digital presentation and social media presence across platforms like Instagram, X and Facebook.
The new series could be particularly effective given Elliott’s tight timeline. The firm is going to need “substantial shareholder support” to call its December meeting, said Szu-Yin Wu, an assistant finance professor at the University of Buffalo. A podcast could be an impactful way of breaking down the activist investor’s complex demands in an engaging and convenient format, she told Observer.
As for whether podcasts will become a new trend in shareholder activism? “It’s possible,” said Wu. Due to its accessibility, the medium allows “shareholders to engage with activism messages while driving or exercising, which could be particularly effective in reaching smaller, individual investors, and the company’s current employees.”