The Shareholder Activists’ View
Survey of Leading Investors Shows M&A Activism, Over All Other Types, Will Have Largest Increase as Investors Look Beyond North America for Targets
The Strategic Communication segment at FTI Consulting — in partnership with Activist Insight — conducted in-depth interviews among activist investors to gauge their views on shareholder activism in 2014. The views from the study indicate that 89 percent of activists believe that 2014 will see an overall increase in merger & acquisition (M&A) activism.
The shareholder activism landscape has changed dramatically over the last several years. According to data compiled by Hedge Fund Research, activist hedge funds managed over $93 billion dollars in 2013, almost triple the amount managed just five years ago, and an increase of 42 percent from an estimated $65 billion in 2012. This increase in investment has been fueled by returns of 16.6 percent in 2013, which far outpaced the average hedge fund, returning 9.3 percent. Further, the investors in these activist funds now include an increasing number of large pension funds and institutions — the same pension funds and institutions that have been increasingly supportive of activists with their votes.
The increased returns and inflows of monies clearly show that activist funds as an asset class are not only here to stay, but are increasing their influence on M&A transactions. As these funds grow larger, they are able to target larger companies, doubling the amount of companies targeted with market caps greater than $2 billion in 2013. Using balance sheet and operational strategies, activists have not been deterred from engaging with well-known Fortune 100 and 500 companies.