We have reached a golden age of investor activism. In the past five full years, activist engagements increased fourfold. Furthermore 64 activist cases have been announced thus far in 2015 (through June 19, 2015) compared with only 18 total transactions in all of 2005 and 102 for 2014, according to S&P Capital IQ data. The success of investor activism has helped these firms both attract more capital and deliver greater returns as their principals now regularly make news and headline events. Many of them have become household names who literally move markets. Better understanding investor activism means better understanding global markets.
We believe a number of factors have contributed to the increasing actions and impact of activist investors, including:
- A strong stock market in a low interest rate environment;
- Greater pressure on managements to deliver performance;
- Limited top-line growth for most companies;
- Large and growing corporate cash balances;
- More acceptance of so-called "financial engineering"; and
- Notable activism with positive results.