Dj Tractor Supply Corporate Stock Slides 7.6%, Underperforms Peers

By Victor Reklaitis

Tyson Foods, Amazon and other big companies are drawing shareholder proposals from investors like the Sisters of St. Francis Charitable Trust and a Baptist group

Tyson Foods, Amazon and other big companies are facing pressure from some shareholders to provide reports about how they're being affected by the Trump administration's immigration policies.

After months of relative silence, business leaders are increasingly weighing in on the Trump administration's immigration crackdown. Earlier this week, a group of business leaders in Minnesota, including the chief executives of Target (TGT) and UnitedHealth (UNH), encouraged local and federal leaders to "find real solutions" to the tensions in the state. Sam Altman, the CEO of OpenAI, told his employees that U.S. Immigration and Customs Enforcement is "going too far." Apple (AAPL) CEO Tim Cook told his staff it's "a time for de-escalation."

But other companies may not get to choose how they respond. Investors are using shareholder proposals to push some S&P 500 SPX companies to at least catalog the impact of the White House's immigration policies on their businesses.

"These ramped-up immigration-enforcement tactics and changes in policies really foment fear in communities, among workers and companies," said Aaron Acosta, a lawyer who works for an organization called Investor Advocates for Social Justice. "They're not good for economic growth, and I think investors know this, but I think companies and investors are not saying much on this point."

Acosta's organization and its partners have championed a shareholder proposal related to the risks of new immigration policies for Tyson Foods (TSN), with the Sisters of St. Francis Charitable Trust acting as the lead filer. That proposal, which is expected to get a vote on Feb. 5 at the giant meat-processing company's annual general meeting, asks for Tyson to conduct and publish an assessment of the anticipated impact of recent changes in immigration policy on the company's finances and operations.

The shareholder proposal "could set a positive precedent for others to speak up against the actually negative economic impacts of this policy, and what it's doing for companies, how it's exacerbating labor shortages, how it's actually not good for business," said Acosta, program director at IASJ.

Acosta says IASJ and its partners have had back-and-forths with Tyson for a couple of decades, including over worker rights during the COVID-19 pandemic. Now they're directing their activism toward how the Trump administration's immigration policies could affect the company, whose workforce has typically included many foreign-born people.

Tyson is just one of the big public companies facing pressure as activist shareholders who are focused in large part on social issues, rather than exclusively on the bottom line, push them to talk about the impact of President Donald Trump's approach toward immigration.

The proposals come amid some evidence that the immigration crackdown is having an impact on businesses across the country. The parent company for Corona and Modelo beers, Constellation Brands (STZ), has said economic stress faced by its large segment of Hispanic consumers is weighing on demand. Coca-Cola (KO) last year noted a pullback in spending among Hispanic consumers, particularly near the U.S.-Mexico border, and off-price apparel chain Burlington Stores (BURL) flagged a similar trend.

'This is a huge business risk'

Zevin Asset Management has led a shareholder proposal that calls for Home Depot (HD), which has drawn immigration raids at its retail locations, to issue a report on the data-privacy and other risks stemming from the retailer's partnership with a surveillance company, Flock Safety. That proposal has come after a startup news outlet, 404 Media, reported that ICE has worked with local police to access a Flock system for tracking vehicles by their license plates.

"We want institutional investors to realize that this is a huge business risk," said Marcela Pinilla, Zevin's director of sustainable investing. Zevin is waiting to find out if its proposal will get a vote. Home Depot typically has held its annual meetings in May.

Google parent Alphabet (GOOG) (GOOGL), Amazon.com (AMZN) and Walmart (WMT) also have attracted shareholder proposals, with SOC Investment Group saying it is seeking reports on how current immigration policy and enforcement are affecting the three companies, which hold their annual meetings in May or June. SOC has noted each company has relied on skilled foreign workers who use the U.S. government's H1-B visa program, which is being significantly reshaped. In addition, Amazon and Walmart could be affected by new policies that are likely limiting the number of immigrants working in agriculture and trucking, according to SOC.

Amazon is facing another shareholder proposal led by American Baptist Home Mission Societies that seeks a report on whether the company's sales of artificial-intelligence and cloud technologies to the U.S. Department of Homeland Security are in alignment with the company's internal policies for the responsible use of such technologies. "In our opinion, there's definitely a misalignment between what the company espouses and what's actually happening with their technologies and services, and so we're really hoping that Amazon can acknowledge that and effectively address those cases of misalignment," said IASJ's Acosta, who has been working with the Baptist group and other partners on the proposal.

Shareholder proposals help draw attention

Shareholder proposals tied to the effects of Trump's immigration policies are likely to have some impact, but most of them probably won't win the support of the majority of a big company's investors, according to Lindsey Stewart, director of institutional insights at Morningstar, a provider of investment research and management.

"Getting a shareholder resolution onto a corporate proxy ballot is an effective means of drawing greater attention to a particular issue," Stewart said. Most of them don't get 50% of the vote, especially in recent years, but support levels of 20% to 40% "may be a success from the standpoint of demonstrating that there is interest from institutional shareholders on these kinds of issues."

Shareholder proposals "kind of reached a high point" in 2021 and 2022 amid "consciousness of the effects of climate change," as well as the #MeToo movement and the killing of George Floyd, Stewart said. Activity "seems to have tailed off," in part because a lot of the things that were asked for have often been implemented by companies, so the remaining issues "tend to focus on much more narrow areas" where there's "a much wider range of opinions," he told MarketWatch. He said another key factor is a move last year by the Trump administration's Securities and Exchange Commission to allow companies to exclude a greater proportion of shareholder resolutions from their proxy ballots.

A Tyson spokesperson said the company has reverified the work authorizations of employees affected by recent changes in immigration laws and has terminated those no longer permitted to work in the U.S. Tyson has prepared and implemented contingency, hiring and retention plans as needed to maintain its workforce and operations, according to the spokesperson.

A Walmart spokeswoman said the company plans to give its response to shareholder proposals in its proxy statement and provided a link to its report on environmental, social and governance issues. Walmart's proxy statements, which are basically briefings before annual general meetings, typically have come in April.

Amazon said in a statement that it values hearing from its shareholders and believes that effective corporate governance includes year-round engagement. The company also said many shareholder proposals largely repeat prior years' proposals and do not consider the actions that the company is already taking or the unique and evolving nature of its operations. "In most cases, we believe the costs of implementing the proposals significantly outweigh the benefits, and that the proposals do not enhance or create shareholder value, or we disagree with how a proposal seeks to dictate how we approach or report on the issue in prescriptive or unrealistic detail," the statement said.

Alphabet and Home Depot didn't respond to requests for comment about immigration-related proposals from their shareholders.

-Victor Reklaitis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

By Debbie Carlson

Rare is the active equity manager who can beat the S&P 500 index. Even rarer is one who has done it consistently over many years.

Meet Susan Bao, manager of the $3.6 billion JPMorgan US Large Cap Core Plus fund J, which has outperformed the S&P 500 over a three-, five-, and 10-year period. The fund boasts an annualized 10-year return of 16.3%, net of fees, compared with the index's 10-year return of 15.8%.

That showing has earned Bao's fund four stars and a bronze medal from Morningstar, and recognition in the industry.

Bao holds long and short positions, betting on many stocks to rise and a smaller number to fall. She created and launched the strategy in 2005, and just celebrated her 20th year as manager of the fund. She joined JPMorgan Chase in 1997 as an analyst.

Barron's recently spoke with Bao about her upbeat market outlook and the appeal of utility and healthcare stocks, and Lowe's. An edited version of the conversation follows.

Barron's : How does your investment strategy work?

Susan Bao: I work with 20 sector analysts who rank stocks in each sector across five quintiles, with cheap stocks in the top quintile and expensive ones at the bottom. The fund is known as a 130/30 fund, and the concept is that if you give me $100, I buy attractive names, then sell short $30 worth of stocks we think will underperform. With the proceeds I buy more attractive names, so now you have $160 working for you. It's an efficient way of using our capital. The net exposure stays at 100%, and we're largely sector neutral.

You're using leverage. How do you control for risk?

We have more than 260 stocks, so it's a diversified fund. We spread risk into many small short positions, keeping the risk management tight on the short side. Even if there is some idiosyncratic risk — say, a stock doubles in price — we aren't forced to buy it back. We review things daily.

What is your investment outlook for 2026?

The economic backdrop will remain pretty healthy. We expect mid-single digit nominal growth in gross domestic product. There will be stimulus for consumers from the One Big Beautiful Bill Act. When the big banks reported earnings recently, they said the consumer is still resilient. Credit markets are still healthy, and at this point, we still expect two interest-rate cuts from the Federal Reserve this year. There still could be deregulation, too.

With valuations high, earnings growth will have to do the heavy lifting to drive the market. Our team expects earnings growth will be around 13% to 14%, but when you peel back the onion, the Magnificent Seven stocks will deliver about 20%-plus earnings growth. That is great, but not as good as the last two years. The other 493 names in the S&P 500 are going to deliver about 11% earnings growth, so we are expecting a broadening of the market this year.

Are you concerned that geopolitics will affect the market negatively?

When valuations are high, people are going to be a little more sensitive to geopolitics, and you're going to have volatility as a result. At the end of the day, you want to focus on earnings. If companies continue to have strong earnings and positive revisions, you might want to use the opportunity to lean into stocks you like. Don't focus on the noise; focus on the fundamentals.

Last year, the fund underperformed the market with a 14.5% return, versus 18% for the S&P 500. That's a rare occurrence. What happened?

Last year we saw two extremes. At the beginning of the year, there was a lot of fear. In the selloff after "Liberation Day," when the White House announced its tariffs, peak to trough the market was down 19%. Then we had a sharp rally. Fear and a little greed made for an emotional market. Shares of low-quality, unprofitable companies and low return-on-equity stocks did well. That is a headwind for our process, which is based on discounted long-term earnings and cash flow.

You were an analyst during the dot-com bubble, and after. Are we in an artificial-intelligence bubble now?

We don't think it's a bubble. During the dot-com bubble, companies laid a lot of unused fiberoptic cables, or dark fiber, in anticipation of demand, and 95% of those stayed dark when the bubble burst. They were speculating. Today, AI is supply-constrained. It is increasingly a power constraint rather than an advanced chip constraint. Other constraints include data-center construction permitting, cooling, and water availability, and access to specialized labor. That is a key difference.

Second, during the dot-com bubble, a lot of capacity was built using debt. Up until now, the hyperscalers were using balance-sheet cash, so they weren't leveraged.

That's changing. Circular financing, or companies funding one another to grow, is coming under scrutiny. What do you make of this development?

We're watching it, but I don't think it is a big issue. It isn't systemic. At some point, we are going to see a correction, but at this point, I am not concerned. We aren't oversupplied.

Rising electricity rates are generating pushbacks on data-center growth. What is your view on the utility sector?

AI data-center demands on power have structurally changed the industry. Affordability is a top political issue, especially with the 2026 midterms [approaching], and political risk on the rise. We are generally cautious on utilities facing major rate cases in swing states. A rate case, in regulated utilities, is a formal process whereby a utility company seeks approval from a regulatory body to adjust its rates so it can recover prudently incurred costs and earn an authorized return. Outcomes are set through commission orders or negotiated settlements and occur every few years.

We're looking at companies that have regulators and lawmakers who are more open to data centers and are helping their utility companies to meet that demand. We like companies that have clear growth, a good execution record, and fully supportive regulatory environments.

What are some of your top picks?

NextEra Energy and Southern Co. have solid records of settling rate cases in a constructive way that controls customer bill impacts while still making sure they can invest and support economic growth in their states.

NextEra's growth drivers are more robust than the market realizes. NextEra is positioned to deliver above-industry earnings-per-share growth of more than 8% annually through 2035. It has strategic investments in renewables and major data-center contracts with companies such as [ Alphabet's] Google and Meta Platforms. NextEra is expected to achieve a 20% compound annual growth rate in its regulatory capital employed through 2032. The recommissioning of the Duane Arnold nuclear plant [in Iowa] is projected to contribute up to $0.16 of annual earnings per share over its first 10 years of operation.

Southern struck a deal to keep base rates steady through 2028, while maintaining its current regulatory setup, which has a return-on-equity range of 9.5% to 11.9%. Southern's contracts for large load demand and data-center growth in the Southeast should drive above-trend revenue and margin expansion. Its current capital plan of $76 billion should rise as it incorporates new commitments, supporting continued above-consensus earnings-per-share growth.

What else do you like?

Entergy is moving quickly to build three new gas-fired plants in Louisiana, thanks to state regulators streamlining the approval process. Entergy has a clear and ambitious growth plan, with a $41 billion capital plan and 19 gigawatts of secured capacity, with eight gigawatts available for additional growth. It aligns with the company's growing data-center pipeline. We expect a compound annual growth rate in earnings per share of 13% from 2025 to 2029, and believe the market has yet to fully grasp the upside to the company's capital plan as it secures more binding commitments from hyperscalers.

What other sectors interest you?

My team just came back from the J.P. Morgan Healthcare Conference, the biggest annual healthcare conference. Sentiment is a little bit better than a few years ago, when everyone was worried about regulatory overhang and most-favored-nations drug pricing [a U.S. policy to lower prescription costs by lowering them to the lowest prices in other developed countries]. That is mostly behind us. The healthcare sector is attractive relative to its own history and the S&P 500. We are adding to some names we already own.

Which ones?

Thermo Fisher Scientific makes the picks and shovels of the healthcare industry. It helps customers in healthcare, life sciences, and research with tools and solutions for everything from diagnostics to drug development. It is benefiting from a pickup in biopharma spending, and adding more products and services. Biopharma research and discovery spending is a secular growth driver, and we expect Thermo Fisher will be a primary beneficiary. We met with the management team, and they are seeing pretty strong return potential in 2026. They feel pretty constructive on the funding environment.

Then, Boston Scientific is a leading medical-device company with best-in-class management. Its strategic focus on fast-growing areas of medical technology, combined with continued investments in innovation, make it one of the fastest-growing medtech businesses. Those growth drivers are stronger than the market appreciates.

What do you think of the company's recent acquisition?

The recently announced Penumbra acquisition for $15 billion gives Boston a leading position in the mechanical thrombectomy market [a procedure to remove blood clots], which is nascent and fast-growing today. Its electrophysiology business [diagnosing and treating heart rhythm disorders] is expected to sustain above-market growth, with projected growth rates in the 20% to 25% range. The Watchman device for stroke prevention is also anticipated to continue its double-digit growth, driven by coming clinical data and expanded indications.

What else do you like in healthcare?