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Today's big stories

Activist investor Elliott Management built up a beefy stake in Salesforce
Here’s how to pick the winning high-dividend stocks – Read Now
Citadel set a new profit record for hedge funds last year

Activists, Activate

What’s Going On Here?

Reports out on Monday show activist investor Elliott Management has got its teeth into Salesforce.

What Does This Mean?

Poor old Salesforce has hit a slump. Sure, the firm’s not quite moping around in its PJs all day and eating Ben and Jerry's from the tub, but it has let itself go: growth’s gone all slack, and the company’s market value has fallen to about half its 2021 peak. And now the down-on-its-luck firm’s caught the eye of activist investors – that’s plucky financiers who buy chunks of companies to dust them off, spruce up operations, and ultimately boost share prices. Big-name Elliott Management has reportedly grabbed a multi-billion-dollar slice of the Salesforce pie, following in the footsteps of fellow activist Starboard Value, which claimed a stake in October. That’s going to pile a whole lot of pressure on Salesforce’s management team, an idea investors seemed to like: they sent the firm’s shares up when news broke.

Why Should I Care?

The bigger picture: Activism’s on trend.
Elliott’s stake in Salesforce is part of a new wave of activist investing that’s sweeping hard-hit global markets. Case in point: by Bloomberg’s count, a massive 177 activist campaigns were announced last quarter – the most since 2018. And we’re not just talking about small fry: along with Salesforce, other giants like Disney and Bayer have been targeted in recent months too.

Zooming out: Unwanted attention.
Being courted by an activist investor is no bed of roses. After all, any activist’s main goal is to boost shareholder returns – and that doesn't always mean improving the company’s fate in the long run. In fact, research shows that a company’s value tends to spike the year after it’s targeted, only to drop off compared to its “untargeted” peers over time. And that’s not to mention the fact that activists tend to nix companies’ long-term investments and efforts at corporate responsibility…

You might also like: How you can work out what Salesforce is really worth.

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Analyst Take

How To Find Inflation-Busting Dividend Stocks

By Theodora Lee Joseph, Analyst

High-dividend stocks might not sound as thrilling as crypto, but these assets have a quiet excitement of their own.

And now that the gap between the S&P 500’s dividend yield and the US 10-year Treasury yield is the widest it’s been in two decades, stocks that can beat that yield have been drawing a lot of attention.

So, that’s today’s Insight: how to hunt for inflation-busting stocks – plus, a look at the ones I found.

Read or listen to the Insight here

All of the opportunity, less of the hassle

Picking out single stocks can be rewarding, sure, but it’s a lot of work.

That’s why a lot of investors opt for exchange-traded funds (ETFs): you can pick up a basket of shares, themed on a specific sector or investing theme, and cut out the stock-picking legwork.

You can get it all with ETFs: diversification, flexibility, and risk management. And with IG’s ETF screener, you can pick out the most inflation-resistant bundles too.

The ETFs in IG’s list have something in common: they’re popular ones that aren’t actively managed, meaning you can pick them up without paying mammoth fees.

Discover how simple stock-picking can be with IG’s ETF screener.

Find Out More

Your capital is at risk. The value of shares, ETFs, and ETCs can fall as well as rise, which could mean getting back less than you originally put in.

Up High, Down Low

What’s Going On Here?

Data out this week showed that hedge fund Citadel broke profit records last year.

What Does This Mean?

The selling point of any hedge fund is its ability to make money in even the most trying market conditions, so last year’s financial earthquakes left them working overtime to dodge the falling masonry and turn a profit. And boy, did Citadel succeed: the fund manager made a series of savvy bets across all kinds of assets that carried its main hedge fund to an envy-inducing 38% return last year. Factoring in strong performances by other areas of the business, that amounted to a tidy $16 billion profit – the biggest dollar gain racked up by any hedge fund ever. That meant Citadel pipped Ray Dalio’s Bridgewater to the post, taking gold as the most successful hedge fund manager of all time.

Why Should I Care?

The bigger picture: Caged tiger.
If you're staring miserably at your own portfolio after reading that, you're not alone: while the top 20 managers of all time raked in total gains of over $22 billion last year, hedge funds overall lost $208 billion – dragged down by especially hard-hit growth stocks. The single biggest loser was American investment firm Tiger Global, joining the Investing Hall of Shame with the biggest annual loss in hedge fund history: an eye-watering $18 billion.

For you personally: ETF, phone home.
To access hedge funds, you need to be some kind of VIP – either a big-dog institution or high-net-worth fat cat. But if you’re neither canine nor fat, fear not: there are some ETFs that let regular Joes sample the kind of trading strategies that hedge funds use. You’ll need to keep your wits about you if you invest in them, though. They can be risky, and a misstep could send your portfolio the way of Tiger Global’s faster than you can say “upsy-daisy”.

You might also like: This AI tool might help you beat the market.

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💬 Quote of the day

“I can’t think of any sorrow in the world that a hot bath wouldn’t help, just a little bit.”

– Susan Glaspell (an American dramatist and novelist)

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fellow activist Starboard Value Bigname Elliott Management Theodora Lee Joseph InflationBusting Dividend StocksBy trying market conditions winning highdividend stocks new profit record Poor old Salesforce main hedge fund crypto bear market

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