BlackRock (BLK), the world’s largest asset manager, has recently paused meetings with companies involved in shareholder battles. This decision comes after the U.S. Securities and Exchange Commission (SEC) rolled out new rules that impact how asset managers engage with companies on certain environmental, social, and governance (ESG) issues.
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Earlier, BlackRock and other asset managers often held discussions with companies about voting ahead of activism campaigns and on regular proxy issues at annual meetings. However, the SEC’s updated rules have created uncertainty about how much they can engage with companies.
It is worth highlighting that the SEC move is part of a larger effort to control the power of large fund managers, which often hold large shares in U.S. companies due to their index-tracking funds.
SEC Demands More Details from Large Asset Managers
Previously, the SEC deemed that fund managers owning more than 5% of a company were not “influencing” corporate behavior when they advised businesses on issues like executive pay or environmental policies. Thus, the firms were allowed to file a short form about their holdings, called a 13-G
Meanwhile, the new rules require asset managers to submit a more detailed 13-D filing, which was usually for activist investors like hedge funds. This form requires information about an investor’s stake in the company and investment purpose. Also, it imposes stricter deadlines for reporting share purchases or sales.
This increased regulatory burden has caused BLK to temporarily halt its meetings to reassess and implement the changes needed to meet these requirements.
BLK Seeks to Expand Presence in India
The news comes amid BlackRock’s plans to strengthen its AI capabilities and expand its support centers in India. centers that handle investment research, risk management, financial engineering, and data analytics. The company is looking to hire about 1,200 engineers and data experts to support these functions. In addition, BLK will inherit a global capabilities center in the country through its proposed purchase of data firm Preqin.
Overall, the company’s efforts to expand its global footprint and enhance its AI capabilities bode well for long-term growth.
Is BLK a Good Stock to Buy Now?
Turning to Wall Street, BLK stock has a Strong Buy consensus rating based on 13 Buys and two Holdsassigned in the last three months. At $1,179.54, the average BlackRock stock price target implies 20.62% upside potential. Shares of the company have gained 13.6% over the past six months.
