Selling My AGL Energy (ASX: AGL) Activist Position

Just over two weeks ago I wrote about how I had bought shares in AGL Energy (ASX: AGL) in order to vote my shares against the stupid de-merger. At the time, I predicted that the de-merger would fail (a good thing) but was less sure if the company could find good management to replace the current value destroying team. I

At the time, the share price was $8.40 and I said:

…my interest in the stock is because I think that it’s worth more than its current price if the de-merger does not proceed,” and further “I actually believe it could be a really good long term investment if former CEO Andy Vesey or a similarly strong leader took over steering the ship.”

Further, I noted:

“I don’t expect fantastic returns from my investment in AGL Energy, but I can’t resist the temptation to participate in some genuine shareholder activism, and maybe make a dollar along the way.”

Since then, the board has announced that the demerger will not proceed, but that they had already wasted about $160m on the folly. Furthermore:

Chairman Peter Botten will resign from the Board upon appointment of a replacement independent

The Board and Graeme Hunt have agreed that Mr Hunt will step down as Chief Executive Officer and Managing Director. Mr Hunt will continue to act in this role until a new Chief Executive Officer and Managing Director is appointed. The Board will immediately undertake a search process to complete this appointment as soon as possible.

Jacqueline Hey has resigned as a Non-Executive Director effective 30 May 2022.

Diane Smith-Gander will resign from the Board following the release of AGL’s FY22 full-year results in August.

While it is great to see some of the value destroyers will be exiting the company, I was disappointed to see that the board has not appointed anyone from Mike Cannon-Brookes’ Grok Ventures to the board. Therefore, until I hear otherwise, I’m assuming that they will try to appoint stooges in their place, and nothing will really change at AGL Energy.

I certainly hope that Grok Ventures succeeds in its attempts to rid AGL Energy of fossils, and I will consider buying back in to the company if the good guys manage to take control of the board, or if they need my vote. To be clear, if there are future votes or extraordinary general meetings that could impact the outcome, I’ll certainly consider buying back in so I can vote my shares with the good guys, and against the bad guys.

But for now, with the demerger plan foiled, and no pending vote to appoint proper renewable energy experts to the board, it looks to me like the battle has entered a lull. Given my main motivation in owning AGL shares was to take part in the activist insurrection against the board; some of whom have now resigned, there is no real point in owning shares right now so I will sell my shares.

In the short term competitor Origin Energy has today announced that “Ongoing volatility in market conditions is likely and may adversely impact operations.” As a result, Origin has withdrawn its FY 2023 guidance. It is possible AGL Energy also has bad news to report, regarding the market volatility. So that is another reason that I’m selling my AGL shares today, but will look to buy back in if Grok Ventures needs my help as a little individual activist.

Happily, this little activist adventure didn’t cost me a dime and actually made me a small profit of over 3% in just two weeks, assuming I can sell for around the current price of about $8.70.

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This article should not form the basis of an investment decision, and my thinking around any of these stocks may change at any time for any reason. It is an investment diary valuable only for the cognitive process it demonstrates and you should cultivate our own thinking. We do not provide financial advice, and any commentary is general in nature. Please read our disclaimer. If you are seeking financial advice, you are in the wrong place.