Activist investing cries out for some pushback

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NEW YORK, Jan 18 (Reuters Breakingviews) – Talk about a crowded trade. The number of aggressive investing campaigns led by firms such as Paul Singer’s Elliott Management and Nelson Peltz’s Trian Fund Management swelled last year, including from a record arrival of rookie practitioners. Early returns, however, suggest it’s getting to be too much of a good thing.

In an annual review of shareholder activism released on Wednesday, investment bank Lazard (LAZ.N) tallied 235 new organized attempts to get a board seat, break up a company or agitate for some other change, including at Walt Disney(DIS.N), Unilever and Australian power generator AGL Energy (AGL.AX). It represents a 36% increase from 2021 and the busiest year since 2018, when there were 249. There were also 55 first-time activists last year, who initiated more than a third of the campaigns.

More was not necessarily merrier. In the United States at least, only a little more than half the targeted companies’ total return outperformed the broader market six months after a campaign was disclosed, Lazard found. Ones in the crosshairs of experienced, brand-name funds fared better more often in the initial one- and three-month stretches, but eventually were only on par with the newcomers. If the result is no better than a coin flip, it gives shareholders and boards fresh reason to question an activist’s arrival. (By Jeffrey Goldfarb)

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