Practical analysis for investment professionals
23 August 2013

Poll: What Is the Primary Cause of the Upturn in Shareholder Activism?

Posted In: Equity Investments

In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked readers what was causing the recent increase in shareholder activisim.

Recent media reports have suggested a rise in shareholder activism. What is the primary cause of this upturn?
Recent media reports have suggested a rise in shareholder activism. What is the primary cause of this upturn?

About 43% of 574 global respondents to this week’s poll dismiss reports of an upturn in shareholder activism as exaggerated and think any perceived increase is primarily attributable to the savvier use of media by activist investors. Indeed, such hedge fund managers as Bill Ackman and Carl Icahn seem to be regular guests on CNBC of late. And Icahn has embraced social media, recently taking to Twitter to publicize his investments in Dell and Apple. Activists are also targeting bigger companies: As reported by Forbes, there have been 14 activist campaigns against companies with market values of $1 billion or greater in the first half of 2013 versus only four such campaigns a decade ago.

Nearly 29% of respondents believe the upturn in activism is mostly indicative of investors’ reaching for additional returns through restructuring and financial engineering, whereas 19% think newfound support from traditionally quiet institutional investors, including pension funds and mutual fund managers, has strengthened the hand of activists and is the primary reason behind the increase. With companies flush with cash and interest rates near record lows, it’s not surprising that activists and pension funds are joining forces.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

About the Author(s)
David Larrabee, CFA

David Larrabee, CFA, was director of member and corporate products at CFA Institute and served as the subject matter expert in portfolio management and equity investments. Previously, he spent two decades in the asset management industry as a portfolio manager and analyst. He holds a BA in economics from Colgate University and an MBA in finance from Fordham University. Topical Expertise: Equity Investments · Portfolio Management

Leave a Reply

Your email address will not be published. Required fields are marked *

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.