Data: Lazard; Chart: Axios Visuals. Data is global for companies with a market cap of $500m or above. May include campaigns without a publicly confirmed thesis. Companies large and small are on alert for a record wave of attacks this year from activist investors.
By the numbers: 2022 saw a record number of new activist investors, and a record share of activists' activity targeted large companies — including Alphabet, Meta and Salesforce.
Driving the news: Last week, Trian Partners claimed victory over Disney in a proxy fight that showed what lies ahead in 2023.
- Irenic Capital's attack on News Corp last fall captured two key activist trends in a single campaign: Irenic was a first-time activist, and it targeted a large, blue-chip industry name.
Details: Easing volatility and low valuations are keeping activists on center stage. And a drop in M&A volume is among the drivers for big-ticket activist campaigns.
- 2022 saw a record number of new activist investors, with 55 first-timers representing 36% of all funds waging campaigns, according to Lazard. The prior record was 48 newcomers for 30% of campaigns in 2018.
- The Lazard data also showed that large-cap companies accounted for a record share of activist targets (18%) in 2022.
What they're saying: "The activists' play with large caps is, increasingly, break it up, divest, spin it off," said Evercore Managing Director Zach Oleksiuk. "Activists are pushing for M&A opportunities where a buyer isn't needed."
- Whipsawing markets and tight financing prompted the M&A slowdown, and that meant CEOs were stuck if they wanted to sell or buy a division, or put the whole company on the block.
- "Volatility and valuations have come down, and that's created opportunities" for activists, Oleksiuk said.
What we're watching: The seemingly ideal conditions for dissident shareholders are not lost on the dozens of funds that launched campaigns for the first time last year.
- These include Mithril Capital's March campaign vs. Adagio Therapeutics, Mill Road's April campaign vs. Big Lots, and Pacific Point's January campaign vs. CH Robinson.
- Lazard data show that the number of new, overall campaigns last year (235) rose 36% from 2021, nearly reaching 2018's record of 249.
"What had always held back the expansion of activism was boards who supported management teams come hell or high water. That's changing," says Jim Rossman, Barclays' global head of shareholder advisory.
The big picture: Another factor fueling activism is the growing support of other shareholders. The negative stigma that used to dog activists is fading, Rossman notes.
- In addition, most companies today have a small number of institutional investors holding a significant amount of stock.
- "Activism has evolved from a market chasing trend," Rossman says. "Now you've got activists who are smart, stock-picking value investors who tell management teams that if you don't listen to me, we'll reach out to the concentrated owners of your stock."