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5yrs ago Hedge Fund hfm.global Views: 327

Activists who were busy in 2018 are keeping the momentum alive this year.

Engaging with a record-number of 922 companies worldwide, activists striking some of the largest deals last year include the usual hedge fund suspects of Elliott Management, JANA Partners and Starboard Value, according to data gathered by Activist Insight Online in association with law firm Schulte Roth & Zabel (SRZ).

M&A activism was front and center last year as the number of deals jumped 23% to 216 worldwide and overall manager activism grew in 2018 after a dip in engagement the previous year. About 67% of activist demands were in favor of companies striking deals, while 33% were in opposition to proposed transactions.

“This past year we’ve seen an increase in M&A-related activism, with activists publicly going against acquisition offers and others encouraging public companies to put themselves up for sale. These strategies were particularly effective in 2018 and remain a big part of the current market,” said SRZ partner Marc Weingarten.

Elliott Management topped a ranking compiled by SRZ listed the top 10 most successful activists of the year based on the number of companies engaged with and the average size of targets and annualized total returns among other factors.

JANA Partners came in second with two high-profile campaigns. Its support of the $10.9 billion sale of Pinnacle Foods to Conagra Brands made headlines as did its newer push for Apple to adopt parental controls on its smartphones.

The firm announced earlier this year it would close two of its hedge funds to focus exclusively on corporate activism, marking a shift toward long-term investing as others choose to leave the industry.

Top-ranked activist Elliott along with fourth-ranked Starboard Value is already making waves in 2019 in taking stakes in eBay and pushing for sales of some of the company’s businesses.

Legion Partners ranked fifth in SRZ’s report. Three of Legion’s portfolio companies were acquired in 2018, including Nutrisystem and Nexeo, and the activist placed 12 directors across six companies without launching a single proxy fight. Razor-maker Edgewell Personal Care, Mattel, and specialty retailer Genesco all settled with the hedge fund.

Overall SRZ found that the number of settlements in the US rose to 142 in 2018, versus 119 in 2017 and 168 in 2016.

Dan Loeb’s Third Point ranked sixth. The long-running Campbell Soup battle ended with the company still conceding two board seats. Going into 2019, the famous activist is resisting Nestle’s sale of its stake in L’Oreal.

Coming in tenth place was ValueAct Capital. While the firm only targeted four companies in 2018, this year the firm celebrated gaining representation on the board of Olympus, the Japanese electronics group that has dealt with a number of scandals in recent years, according to the SRZ report.

 

 

M&A activism shines in a deal friendly environment on Absolute Return.


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