The founding class of shareholder activists - guys like Nelson Peltz from Trian Partners, Paul Singer of Elliott Management, and Carl Icahn are getting older. While none show any signs of slowing down, their success in buying up stakes in companies and lobbying for change has paved the way for a new generation of activists. Managers who have worked for some of these established hedge funds have branched out on their own in hopes of replicating their success.
More than $62 billion was deployed by activists and their campaigns last year, compared to nearly $31 billion in 2016. Emboldened by the rise of activism, non hedge funds are also activist stances behind the scenes. But the prevalence of shareholder activism has changed the way their campaigns are conducted. The number of proxy fights fell to a five-year low last year, showing that the nature of campaigns is becoming less confrontational.
Proxy fights are battles where hedge fund managers seek to instal their hand-picked director on to the board, and they can cost millions of dollars for a company. As the investing style has gone mainstream, with even the largest of companies at risk, more executives than ever are willing to engage. That's because many corporate leaders would rather have a dialogue with their new shareholders than a costly public battle.
Activists have embraced the change. Gone are aggressive public campaigns and inner terms like constructivist and active shareholder. Activist brands might be friendlier, but their battles are still mighty.