Where Have All The Shareholder Activists Gone? Campaigns Slow Amid Market Turmoil

Activist investors intent on shaking up Corporate America may be getting cold feet as new data points to a slowdown of campaigns as markets gyrate amid fears of faster rate hikes, runaway inflation and geopolitical turmoil.

The marked decline in activist campaigns seen over the last four weeks could give corporations more breathing room to tackle problems on their own, avoiding battles with corporate agitators over leadership, spinoffs or even a sale of the entire company, said lawyers, bankers and industry analysts.

Shareholder activists, typically hedge funds like Elliott Management, Starboard Value, Jana Partners and Sachem Head Capital Management, employ investment strategies where the goal is to increase the share price by pushing underperforming corporations to perform better.

They often campaign for board seats, a change in CEO, a liquidation of assets or even a sale of the company.

Data from research firm Insightia shows that investors launched only 22 activist campaigns at U.S.-headquartered companies between May 20 and June 20, down from 25 during the same time in 2021 and 42 campaigns launched in 2018, the year with the most campaigns during that period in the last seven years.

"An activist isn't in the business to run proxy fights," said Cas Sydorowitz, global head at Georgeson, which provides shareholder engagement, proxy solicitation and governance services. "They are in the business to generate an outsized return for their clients."

This year, few activists are doing that.

Indeed, in the first five months of 2022, activists rank among the worst performers in the broader hedge fund industry, posting an average loss of 13% for the year through the end of May, according to data from Hedge Fund Research. More recent data has not been compiled yet.

They, like many other investors, have been battered by tumbling stock markets that have been rattled by the highest inflation rates in decades, fears that central bankers will quickly end their easy money policies and concerns about global growth in the face of war in Ukraine.

Meanwhile hedge funds focused on macro investing are up 9% on average and funds that focus on energy investments are up 4.55%, HFR data shows, even as the broader stock market S&P 500 Index has tumbled nearly 18%.

GRAPHIC: Number of shareholder activism campaigns globally (

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The recent slowdown in activist campaigns stands in contrast to a quicker pace seen in the first few months of the year when activists were stepping up their pressure again after some gave companies a reprieve during the pandemic.

Between Jan. 1 and June 22, activists launched 669 campaigns at U.S.-headquartered companies, compared with 503 campaigns launched during the same time in 2021, Insightia data shows. This year's battles included fights for board seats at chemical company Huntsman Corp, retailer Kohls Corp, food distributor US Foods Holding Corp and toymaker Hasbro Inc.

Globally, 999 campaigns were launched in the first months of 2022 compared with 825 a year earlier, when the effects of the pandemic dampened the pace of campaigns, Insightia data shows.

Now fund managers, lawyers and investors agree that market turbulence is dealing activists a new punch soon after COVID-19 prompted many to step to the sidelines.

In the last six months activists, who make their campaigns public, have increasingly asked for companies to sell off units or even put themselves up for sale, leaving bankers to say that the demands for an M&A component in campaigns have risen to roughly 50% now from about 30% several years ago.

Yet with the Standard & Poor's 500 index down 17.8% since January, many activists have concerns about how their demands may be received as valuations are dropping and financing is tougher to obtain, bankers and lawyers said.

At Zendesk Inc for example, the software company initially rebuffed offers to sell for as much as $132 a share in February, subsequently declared the sales process dead and then agreed to sell for $77.50 a share all while activist Jana Partners was forcefully pushing for a sale and prepared for a proxy contest where investors said they would likely have handily elected the Jana nominees to the board.

"Investors that are otherwise inclined toward activism are unable to predict how much stock prices will further decline and therefore shy away from spending capital on full-blown campaigns for the time being," said Lawrence Elbaum, who co-heads law firm Vinson & Elkins' shareholder activism practice.