Survey: Support For Shareholder Activism on the Rise Among Investors

Oct 31 2016 | 11:06pm ET

The activist efforts of alternative fund managers are increasingly accepted by a wide range of corporate stakeholders, according to the 2016 edition of the Shareholder Activism Insight Report

Published by law firm Schulte Roth & Zabel in association with Activist Insight and FTI Consulting, the report surveyed the views of 37 of the leading activists in the marketplace and found that that acceptance and support for shareholder activism continues to increase across all constituencies. Notably, 92% of those surveyed believe institutional investors are more accepting of activists than in previous years, Schulte said in a statement. Activists are also experiencing increased receptivity from retail investors, boards of directors, management teams and the media, the firm said. 

Other key findings from the report:

  • Only 12% of those surveyed see the volume of activism decreasing over the next 12 months – and almost three-times as many (32%), expect it will increase. The bulk of respondents expect activism to continue at current levels.
  • Activists believe the U.S. continues to present the largest investment opportunity, with 97% saying there is some or a lot of opportunity there. 84% of respondents see some or a lot of opportunity for activism in the United Kingdom, compared to 74% for the rest of Europe, and 19% of activists see no opportunity in Asia.
  • 66% of activists feel companies should enter into an active dialogue with investors as an effective defensive tactic.
  • The median length of time respondents hold their activist investments is three years and they target a median alpha-adjusted annual return of 20% on activist investments.
  • An overwhelming majority (84%) of respondents expect hedge funds to continue to take the fight to management; only 13% think index funds will play an increased activist role. 
  • Two-thirds of respondents felt small-cap companies present a lot of opportunity for activism, while fully 97% felt there is some or a lot of opportunity in mid-cap stocks.

The full report is available here.

The report’s survey sample consisted of economic activist funds that have combined assets under man¬agement of $153 billion and have collectively engaged more than 420 companies in activist campaigns since 2010.

Schulte Roth & Zabel is a full-service law firm with offices in New York, Washington, D.C. and London. It is among the leading law firms serving the financial services industry and was named “best onshore law firm” at the 2016 HFM Hedge Fund Services Awards. 

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