Activism by investorsActivist investors are increasingly successful when they seek to influence their target companies’ strategy rather than push for financial rewards, according to a JPMorgan Chase report.
Activists demanding changes in strategy were successful in 36.9 percent of cases in 2015, up from 22.6 percent in 2010, according to the report.
The success rate for pushing changes to capital structure, such as special dividends and buybacks, increased more slowly though it is still higher overall, rising to 42.1 percent this year from 40.4 percent five years ago, it showed.
The 2015 proxy season saw a six-year high in the number of activist campaigns that threatened a proxy fight - where activists seek to recruit other shareholders to vote in favor of their proposals - as well as campaigns by more than 50 investors who had not previously or recently attempted to exert their influence. Management settled in 53 percent of proxy cases this year, with most agreements involving board representation.
Activist assets reached $129.7 billion in the second quarter of 2015, a 9 percent increase from the end of 2014 and a 177 percent increase from 2010, the report said, citing Hedge Fund Research.
Prominent activist funds are keeping busy during the traditionally quieter summer months, with at least three major campaigns revealed in the past week alone.
Billionaire investor Carl Icahn on Thursday reported a new 8.18 percent activist stake in Cheniere Energy and plans to seek talks with the natural gas exporter’s management and perhaps board seats “if appropriate.”
Shares of the gas exporter are undervalued and Icahn will seek discussions on “operations, capital expenditures, financings and executive compensation,” according to a 13D regulatory filing Thursday.
Pershing Square Capital Management, led by Bill Ackman, said late Wednesday it has built a 7.5 percent stake in snack maker Mondelez International Inc. valued at about $5.6 billion.
And on July 31, Rolls-Royce Holdings said activist hedge fund ValueAct Capital Management became its biggest investor, weeks after the U.K. engine maker appointed a new chief to overhaul its business.
In June, Cevian Capital AB, the Swedish investor that tends to focus on industrial strategy, built a 5.1 percent stake in Swiss power grids maker ABB. [Bloomberg]