In this piece, we will take a look at the 10 stocks targeted by activist investors right now.
Activist investors play an important role in deploying various strategies to try and unlock value in stocks they believe are trading below their fair value. By paying millions and even billions of dollars to buy stakes in companies, they accrue significant power and the right to lobby for changes they believe will help bolster share price and shareholder value. Therefore, it does not come as a surprise that the top 10 stocks targeted by activist investors right now have also seen their leadership targeted as one of the ways of engineering changes to unlock value.
Last year alone, companies faced a record number of activist campaigns as shareholders tried to insert optimum pressure to oust directors of companies struggling amid deteriorating macro conditions. Some activist investors went to the extent of pushing for the sale of businesses whose shares had tumbled significantly.
Consequently, there were 252 activist campaigns globally in 2023, a 7% increase from the previous year. The fact that the top 10 stocks targeted by activist investors now also include blue-chip businesses underlines that no one is safe from scrutiny.
The significant increase in activist campaigns came from geopolitical instability and economic uncertainty. Nevertheless, activist investors shrugged off these concerns as they showed their resilience in pushing for corporate changes and operational efficiency in the race to unlock shareholder value.
Similarly, investors closely watch activist investors’ moves in the market as they help shed light on some of the best-undervalued opportunities worth exploring. A report of 550 activist campaigns has already shown that activist investors often outperform the overall market by 6.3% through their campaigns. The report by Álvaro & Marshal clearly shows why it is essential to closely watch activist investors’ moves when trying to uncover high-risk reward opportunities in the market.
Additionally, activist campaigns focused on operational demands to change how companies operate to generate value often outperform the market by 9.4% on average. The outperformance stems from activist investors installing their preferred directors on the board of directors to try and influence how a company operates in its push to unlock shareholder value.
One trend that is becoming increasingly clear is that activist campaigns are becoming increasingly regional and dynamic. With the US equities outperforming the overall market over the past few years, activist investors are increasingly targeting stocks in other underperforming regions. Consequently, the activist investors launched 69 campaigns in Europe last year, focusing on pushing for mergers and acquisitions. Equities in Asia Pacific were not spared either, going by the 44 new campaigns.
While the UK recorded a 71% increase in activist campaigns to 29 campaigns and the US recorded a 20% drop to 109 campaigns in 2024, Canada saw a 171% increase in shareholder activism to 19 campaigns. Nevertheless, US-based activist investors continue to account for the most significant share of global activist campaigns. For instance, three of the busiest US-based activist investors launched 14% of the worldwide activist campaigns.
Over the years, activist campaigns have been dominated by high-profile hedge funds, including Icahn Enterprises, Jana Partners and Trian Partners. Elliott Investment Management is one activist hedge fund that stands out when it comes to unlocking value in under two years.
The trend is slowly changing, with new, more aggressive funds pushing to make their mark. For instance, more than 40% of campaigns last year were spearheaded by hedge funds for the first time, especially in Europe. The change of guard stems from the barrier of entry being lowered, giving shareholders the ability to launch more campaigns.
It is one of the best times to watch the 10 stocks targeted by activist Investors right now, as the campaigns are highly successful. The double-digit returns posted by activist investors in 2023 in one of the most challenging environments amid the high interest rates underscores the effectiveness of some campaigns.
For instance, activist investors who pushed for management changes and the streamlining of operations enjoyed an average return of 20.2% in 2023, a significant improvement from an average loss of 16% in 2022. Even as the S&P 500 gained 24%, activist investors like Mason Morfit’s ValueAct Capital came out on top, posting a 39% return, while Bill Ackman’s Pershing Square holdings delivered a 27% gain. Healthcare-focused hedge fund Caligan Partners posted a 37% gain as Engaged Capital topped the S&P 500 gain with a 29% gain.
Source:pexels
The activist campaigns were mainly helped by a rising stock market and focused on some of the most prominent stock picks on a roll, like Nvidia for AI and cloud computing powerhouse Salesforce. The campaigns also turned out to be a great success for the activist investors pushing for cost cuts, strategic alternatives, and management changes to navigate the high interest rate environment.
In the first half of 2024, activist investors launched a record number of campaigns, 147 of which topped the previous 143 set in 2018. In the second quarter, they launched 86 campaigns, with Elliott Capital emerging as the busiest, launching 11 campaigns and investing $11 billion in the capital in a bid to enhance its influence in its targets
The surge in activist campaigns in 2024 threatens to trigger costly boardroom battles as the activist investor pushes for management changes, spin-offs, and outright sales.
Our Methodology
A closer look at how shareholders push for optimum value shows that activist investors are not planning to go slow anytime soon. Instead, they are ready to push companies harder for changes, including accelerating board changes to unlock value. Consequently, we have compiled a list of the most recent activist campaigns and ranked them based on their recent market capitalization. At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Stocks Targeted by Activist Investors Right Now
10. Icahn Enterprise at the JetBlue Airways Corporation (NASDAQ:JBLU)
Market Cap: $1.98 Billion
Icahn Enterprises’ Equity Stake: $200 Million
JetBlue Airways Corporation (NASDAQ:JBLU) is another high-profile airline among the top 10 Stocks targeted by activist investors. Early this year, activist investor Carl Icahn, through Icahn Enterprise, confirmed a 10% stake in the stock worth about $200 million, insisting it was undervalued. JetBlue Airways Corporation (NASDAQ:JBLU) has been trying to cut costs to become more reliable and return to profitability.
Icahn has already had his way, having secured two board seats that put him in a prime position to push for strategic changes that have the potential to unlock any hidden value. The fact that Icahn acquired stakes in JetBlue Airways Corporation (NASDAQ:JBLU) on the belief they are undervalued and represent an attractive investment opportunity underscores why it is one of the top 10 stocks targeted by activist investors.
9. Jana Partners at the Wolfspeed, Inc. (NYSE:WOLF)
Market Cap: 3.04 Billion
Jana Partners’ Equity Stake: $35.6 Million
Wolfspeed, a leading producer of silicon carbide, is one of the 10 stocks targeted by activist investors right now after going down by 46% in 2024 and losing more than 60% in market value over the past 12 months. The stock has caught the attention of activist hedge fund Jana Partners, which has taken note of its negative 61% shareholder return over the past ten years despite having a competitive advantage as a market leader. The activist investor acquired stakes worth $35.6 million in the company late last year.
The activist investor is pushing the company to prioritize executing its Mohawk Valley and Siler City projects and focus on generating acceptable returns on capital. Additionally, Jana Partners wants the board to consider a potential sale of the company to unlock value.
8. Starboard Value LP at the Alight, Inc. (NYSE:ALIT)
Market Cap: $4.04 Billion
Starboard Value Equity Stake: $392.1 Million
Alight, Inc. (NYSE:ALIT), a cloud-based integrated ad digital human capital company, has been a big disappointment in 2024. The stock is already down by 12%. Likewise, activist hedge fund Starboard Value LP believes it is time to push for aggressive changes to reinvigorate the services company’s fortunes and prospects.
Having launched an activist campaign in the company early in the year, the hedge fund has already nominated three independent directors to the board of Alight, Inc. (NYSE:ALIT). The activist investor has already questioned the current CEO, Stephan Scholl, a talented technologist and software expert who is not experienced in matters of benefit to the service company.
7. Elliott Management at the Match Group, Inc. (NASDAQ:MTCH)
Market Cap: $8.57 Billion
Elliott Investment Management’s Stake: $1 Billion
Elliott Management has spotted an opportunity to unlock value in Match Group, Inc. (NASDAQ:MTCH), which offers dating products worldwide. The activist investor, which has amassed a $1 billion stake in Match Group, Inc. (NASDAQ:MTCH), has been pushing for management changes and has already secured two board seats to make for strategic alternatives to unlocking value.
Elliott Management is interested in pushing for strategic initiatives to help turn Match Group, Inc. (NASDAQ:MTCH) ‘s fortunes around as it faces declining paying users amid economic uncertainty. The company’s growth has stagnated from the peaks of 2021 at the height of the pandemic. Its stock has already shed more than 70% in market value.
6. Elliott Management at the Southwest Airlines Co. (NYSE:LUV)
Market Cap: $16.27 Billion
Elliott Investment’s Equity Stake: $1.9 Billion
Southwest Airlines Co. (NYSE:LUV) has been a big disappointment, losing more than 50% of market value over the past three years. The stock dropped by 21% in 2023 as the S&P 500 gained 24%. The underperformance has caught the attention of Elliott Investment Management, making Southwest Airlines Co. (NYSE:LUV) one of the 10 stocks targeted by activist Investors right now.
The activist hedge fund believes it is high time CEO Bob Jordan and Chairman Gary Kelly resigned, having confirmed a $1.9 billion stake in Southwest Airlines Co. (NYSE:LUV). Consequently, it is pushing for management changes and business reviews to revitalize its growth metrics. While Elliott is one of the most prominent investors with an 11% stake, Southwest Airlines Co. (NYSE:LUV) has received support from Artisan Partners in its campaign to unlock value through management changes.
5. ANCORA Advisors at the Norfolk Southern Corporation (NYSE:NSC)
Market Cap: $48.30 Billion
ANCORA Advisors” Equity Stake: $1 Billion
When activist investor ANCORA Advisors acquired $1 billion worth of stakes in Norfolk Southern Corporation (NYSE:NSC), it insisted the company had become the worst-performing US Class 1 freight railways. It cited failed strategies, insufficient accountability, and poor leadership oversight as reasons Norfolk Southern Corporation (NYSE:NSC) has been unable to generate optimum shareholder value.
As part of its aggressive activist campaign, the hedge fund pushed for eight new independent directors who would be required to appoint a new CEO. The hedge fund has already secured three seats on the board but has yet to unsettle the current CEO, Alan Shaw, as it continues to wedge its activist campaign.
4. Starboard Value LP at the Autodesk, Inc. (NASDAQ:ADSK)
Market Cap: $53.14 Billion
Starboard Value’s Equity Stake: $500 Million
Autodesk, Inc. (NASDAQ:ADSK) is one of the top 10 stocks targeted by activist investors right now as Starboard Value continues to mount pressure after a $500 million stake purchase. With the investment, the activist investor is pushing for changes in the design software maker, believing Autodesk, Inc. (NASDAQ:ADSK) has what it takes to improve its margins.
The activist hedge fund is pushing for board changes and has also held discussions with management to discuss ways to enhance operations and corporate governance. The investor has also criticized management over the recent handling and disclosures of internal investigations that led to the ouster of the chief financial officer. The activist investor believes management changes could help improve margin and investor relations, bolstering Autodesk, Inc. (NASDAQ:ADSK) ‘s value.
3. Bluebell Capital Partners at the BP p.l.c. (NYSE:BP)
Market Cap: $78.79 Billion
Bluebell Capital Partners’ Equity Stake: N/A
BP p.l.c. (NYSE:BP) is one of the top 10 stocks targeted by activist investors right now on the belief that the oil and gas company is undervalued. Bluebell Capital Partners has already launched an activist campaign against BP p.l.c. (NYSE:BP), insisting management take several steps to ensure it remains on its path to generating shareholder value.
The changes include the company slowing its commitment to reduce oil and gas production by 25% by 2030 to reduce carbon emissions. The activist investor is also challenging BP p.l.c. (NYSE:BP)’ s plan to focus on its transition businesses, including charging, renewables and hydrogen.
“primarily due to an ill-conceived strategy aimed at drastically shrinking BP’s core business (oil and gas), on the one hand, and rapidly promoting a risky diversification into sectors with lower targeted returns and where BP has ‘no right to win,” Bluebell Capital said in a statement.
According to the activist investor, BP p.l.c. (NYSE:BP)’ s push to diversify away from its core oil and gas business into renewables and other projects lowers returns on capital and reduces value generation for shareholders.
2. Trian Partners at the The Walt Disney Company (NYSE:DIS)
Market Cap: $177.73 Billion
Trian Partners’ Equity Stake: $3 Billion
Theme park giant The Walt Disney Company (NYSE:DIS) has been the subject of a fierce activist campaign spearheaded by Nelson Peltz of Trian Partners. Late last year, the activist investor pushed for three board seats, insisting it was not satisfied with the performance of CEO Bob Iger. With about $3 billion worth of stakes in The Walt Disney Company (NYSE:DIS), the hedge fund can agitate for significant changes.
The activist hedge fund has criticized The Walt Disney Company (NYSE:DIS)’s capital spending and money-losing streaming business. While Disney remains one of the ten stocks targeted by activist investors, Trian Partners and Blackwell’s Capital suffered a significant blow when shareholders rejected part of the plan to shake up the entertainment giant.
The Walt Disney Company (NYSE:DIS) has been the center of a fierce activist investor battle, with Trian Partners on one end and Vanguard Group Capital siding with other investors in favour of CEO Bob Iger.
1. Elliott Management at the Texas Instruments Incorporated (NASDAQ:TXN)
Market Cap: $182.27 Billion
Trian Partners’ Equity Stake: $2.5 Billion
Texas Instruments Incorporated (NASDAQ:TXN) is one of the 10 Stocks targeted by activist investor Elliott Investment Management, a $2.5 billion stake in the semiconductor giant. The activist investor has taken issue with Texas Instruments Incorporated (NASDAQ:TXN) for lagging the overall stock market returns at a time when chip companies are flying high amid an AI frenzy.
The activist investor has also taken issue with the comments that they spend too much on massive capital projects instead of capital discipline to restore investors’ value. The activist hedge fund wants Texas Instruments Incorporated (NASDAQ:TXN) to use a capacity management strategy and introduce a free cash flow per share target.
There are tremendous investment opportunities and value to unlock by tracking some of the 10 stocks targeted by activist investors. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than the top activist investment plays, check out our report about the cheapest AI stock.
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