The stock market gave investors a wild ride in 2018, but the most energetic investment action of all came from shareholder activists, who targeted a record number of companies last year.
Activists stormed the barricades of 226 companies in 2018, versus 188 the year before, according to a study by investment firm Lazard. And despite a volatile stock market in the last quarter, which might have given these investors pause lest their actions damage targets’ value, this period was the most active of any fourth quarter in history, the research showed.
With proxy season coming up, there are few signs that these dramas will abate anytime soon.
By Lazard’s count, the most prolific activist last year was Elliott Management, with 22 new campaigns launched. Founded 42 years ago by Paul Singer (Elliott is his middle name), the firm showed a good success record.
Displeased with Sempra Energy’s performance, for instance, Elliott and ally Bluescape won two board seats. Elliott pressured Athenahealth into putting itself up for sale. And it forced Hyundai into a restructuring plan and a share buyback (although the activist firm still remained unsatisfied).
Another veteran of the activist world, Carl Icahn, also was busy. He and another activist, Darwin Deeson, took control of Xerox’s board. In the process, a merger they opposed with Fujifilm was scuttled. Icahn didn’t win everything, though: He tried to block Cigna’s acquisition of Express Scripts, but later went along.
Meanwhile, Daniel Loeb’s Third Point Management launched an assault on family-controlled Campbell Soup, and succeeded in winning two board seats and a say on the new CEO.
M&A was the biggest factor in attracting activists, Lazard found: One-third of the campaigns begun last year were driven by mergers and acquisitions, with pushing for a company sale the biggest goal. Deep-sixing or sweetening existing deals was the next objective, followed by breaking up a company or forcing it to divest businesses.
Some more fun facts from 2018 illustrate how serious these folks are: Nine of the top 10 activists invested more than $1 billion. Overall, activists deployed $65 billion in capital, compared to $62.4 billion in 2017. And the activist field is growing: a record 131 investors were at it, with 40 first-timers versus 23 the year before.
And as Icahn once described the lot of an activist investor: “You learn in this business that if you want a friend, get a dog.”
Tags: Carl Icahn, Lazard, M&A, shareholder activist