Why did the AGL share price lag the ASX 200 on Monday?

The S&P/ASX 200 Index (ASX: XJO) ended up having a rather disappointing finish to Monday’s session. That’s despite netting some big gains early this morning. Even so, the ASX 200 has finished up for the day at 7,146 points, down by 0.16%. But that’s nothing compared to the AGL Energy Limited (ASX: AGL) share price.

AGL shares had a pretty disappointing day. The energy utility share fell by a nasty 1.41%, ending the trading day at $7.70 a share.

So what happened with AGL shares this Monday that might have elicited such an underperformance of the broader market?

Well, there hasn’t been any news or announcements out of the company today, just to clear that up.

But perhaps investors are still feeling a little disappointed after the news last week regarding AGL’s rival Origin Energy Ltd (ASX: ORG).

Origin revealed it was likely to recommend the $9 per share bid from Brookfield Asset Management and MidOcean Energy to its shareholders last week. So it appears AGL has been overlooked, and shareholders have had to watch Origin shares rocket more than 30% since last Wednesday. That’s gotta hurt.

But AGL has also got a big day ahead of it tomorrow. That’s when the company is holding its annual general meeting (AGM). This could matter even more than normal.

AGL share price struggles before AGM

That’s because AGL is still in the midst of something of a power struggle. Activist shareholder Mike Cannon-Brookes has already almost single-handedly scuttled the proposed demerger that AGL was considering until a few months ago. That’s despite a relatively small personal stake (through Grok Ventures) in the company worth just over 11%.

Cannon-Brookes is also putting forward his own nominees for AGL’s board tomorrow. According to reporting in the Australian Financial Review (AFR) today, shareholders do look set to give the nod to Cannon-Brookes’ four nominees. This would see the AGL board swell to nine members.

However, the report also claims that shareholders are about to endorse the energy transition strategy that the incumbent directors have put forth as well. This, the article alleges, could result in “potentially giving the warring factions of chairman Patricia McKenzie and major shareholder Mike Cannon-Brookes’ competing claims to a mandate”.

AGL has seen perhaps the most disruptive period in its near-200-year history in the past few years. The company’s shares have fallen by 75% in value over the past five years. It has fallen from around $25 a share to the $7.70 we see today.

So in light of all this, it would probably be fair to say that many shareholders crave consistency and stability. It doesn’t look like tomorrow’s AGM will throw up much of that. This might be the reason investors stayed away from AGL shares today.

The post Why did the AGL share price lag the ASX 200 on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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