Nelson Peltz
The poor performance of active management has been well chronicled of late but the active fund management industry is not going down without a fight. Apologists have been quick to point to artificially low interest rates as one factor dragging down the collective returns of stock pickers. Index huggers — those managers with low tracking error funds and almost no hope of outperforming their benchmark after fees — are also to blame. In response, active managers are pointing to their “active share” — a measure of how much a portfolio’s holdings differ from those of its benchmark — and research that suggests funds with the highest active share do indeed beat their benchmarks. A review of just-filed quarterly 13F reports reveals that some of the most prominent fund managers truly embrace their role as active portfolio managers.
When compared to the hedge fund industry at large, activist investors have garnered a disproportionate share of the headlines this year, and for good reason: they’ve been busy — launching 148 activist campaigns in the first half of 2014 alone — and they continue to outperform their hedge fund peers.
Thanks to a bull market and strong relative returns, assets under management for activist investors have swelled — tripling in just the last five years — allowing these high profile fund managers to launch more campaigns and take on bigger companies.
Activist investors have significantly raised their profiles in recent years. According to Activist Insight, there were 237 activist campaigns launched in 2013, up from less than 30 in 2000. And while activists used to fly mostly under the radar, many have now embraced new media platforms as a way to make their cases heard.