In this piece, we will take a look at the 40 companies that are facing activist pressure.
The equity market has been on a roll, rallying by 10% in the first half of 2024, adding to the 24% gain registered in 2024. Amid the gains, one would be mistaken to think activist investors would go slowly, given the bumper returns on offer. That is not the case, given that activist investors are becoming more active and bold in a push to squeeze optimum value in the equity markets.
It was arguably one of the busiest years for activist investors as they launched 1,151 campaigns in 2023, up from 1,083 campaigns recorded in 2022. Since 82% of the campaigns revolved around environmental, social, and governance issues, ESG affirms a new wave of activism in the equity markets.
In addition, there was a 7% jump in new activist investor campaigns in 2023 to 252, setting a new record. Likewise, there were 77 first-time activist-initiated campaigns in 2023, up from 55 in 2022, according to data by Lazard. Some of the most targeted sectors with activist campaigns were industrials at 21%, followed by technology at 20% and healthcare at 20%. Consumer and financial sectors accounted for 11% and 8% of the activist campaigns, respectively.
Activist investors can be individuals or institutions that acquire a controlling stake in a target company. With the investment, they gain the much-needed power to push for strategic changes that can unlock hidden value in a company they believe is underperforming. A push for seats on the board is one of the strategies deployed as one way of influencing decision-making and advocating for management changes.
In aggressive cases, activist investors can push for the sale of the entire business or some part of the business to generate shareholder value. Some activist campaigns also involve pushing for restructuring, such as cutting costs to bolster margins.
A push to sell the entire business or split some units were some of the favorite actions pushed by activist investors, in 49% of the activist campaigns last year. Additionally, the activist investors pushed for a change of leadership, with some advocating for streamlining operations through cost cuts to improve margins. Activist investors pushed for management changes in 10% of the campaigns initiated last year following a 46% year-on-year increase in 2022.
Elliot Management, Starboard Value, Trian Partners, and Third Point were some of the top US activist investors at the center of most corporate wars. US activist investors accounted for 14% of the total activist campaigns last year, affirming their influence in pushing for value in various companies. Likewise, ValueAct posted a 39% gain through its campaigns as Caligan Partners rose 37% and Engaged Capital returned 29%. Pershing Square Holdings, spearheaded by activist Bill Ackman, generated a 27% gain.
Activist investors fared much better in 2023 thanks to the rising stock market that shrugged off the high interest rates that had been increased to 22-year highs of 5.25% to 5.50%. Similarly, activist hedge funds also deserve some credit for focusing on market-beating stocks that did much better amid an uncertain market environment. In the end, activist investors enjoyed one of their best years in the recent past, with an average return of 20.2% in 2023. The gains came after the strops had lost an average of 16% in 2022
Activist investors showed no signs of slowing in the first half of 2024, going by 147 new campaigns, surpassing the 2018 record of 143. In the second quarter of 2024, 86 new activist campaigns were recorded, barely a year after a strong rebound.
The heightened activist investor pressure came amid concerns that factors like high interest rates and slowing growth would hurt the company’s performance. Amid a surge in activist investor campaigns in 2024, the success rates of most of the campaigns have dropped significantly. For instance, most of the campaigns in the first half only won 74 board seats, down from 93 as of last year. It is also a concern that activists only secured 11% of their sought-after board seats compared to a 65% win ratio in 2023. The significant decline in success rates affirms that companies are becoming more effective in fending off activist pressure.
Investors are already pushing companies harder for change in 2024, concerned by the impact of soaring geopolitical instability and economic uncertainty. Creating a lower and stable interest rate environment is expected to create more opportunities for activist investors to capitalize. Given that nearly half of the campaigns in 2023 involved a merger and acquisition objective, it is expected to be the case in 2024, especially with the Federal Reserve cutting interest rates.
Reports show that there could be more than $2 trillion in capital set for acquisitions in 2024, and more activist investors are expected to demand companies review their business portfolios. Part of the proposals that activist investors are likely to push for is the divestment of some units or the sale of the entire company.
Even though activist investing is evolving significantly with a renewed focus on industrial investment plays, technology companies are expected to dominate most campaigns in 2024. Nevertheless, the broader situation, including unpredictable interest rates, political instability, and the forthcoming US presidential race, adds complexity, making it harder and longer for activist efforts to succeed.
With this context, let’s take a look at the 40 companies facing activist pressure.
Our Methodology
Activist campaigns are growing as activist investors look to unlock hidden value in stocks trading below their fair value. Upon sifting through numerous media reports and scanning the Insider Monkey hedge fund database, we came up with the 40 companies facing activist pressure. The stocks are ranked based on the number of hedge funds that own them, as of Q1 2024.
Note: The returns are calculated from the investment date to August 1, 2024.
We also mentioned the number of hedge funds that had bought these stocks during the same filing period. Why are we interested in 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).
40 Companies Facing Activist Pressure
40. Engaged Capital at PRA Group, Inc. (NASDAQ:PRAA)
Stock Return: 9.44%
S&P 500 Return: 22.39%
Investment date: 13/12/2023
Number of hedge funds holding stakes: 7
PRA Group, Inc. (NASDAQ:PRAA) is a financial services company that purchases, collects, and manages a portfolio of non-performing loans worldwide. The company buys non-performing loans from banks and other financial institutions and then seeks to collect on the debt.
Late last year, activist head fund Engaged Capital built a 5% stake in PRA Group, Inc. (NASDAQ:PRAA), pushing the company to improve its operations to generate more value. The activist hedge fund wants the company to cut costs and add new experience to its senior leadership.
Engage Capital is open to nominating new directors to the board that will influence the company’s strategic direction. PRA Group, Inc. (NASDAQ:PRAA) is up by about 1.2% for the year. Insider Monkey database indicates that 7 out of 920 hedge funds held stakes in the company as of the end of the first quarter of 2024.
39. Trian Fund Management at Solventum Corporation (NASDAQ:SOLV)
Stock Return: 20.6%
S&P 500 Return: -1.2%
Investment date: 22/07/2024
Number of hedge funds holding stakes: 10
Solventum Corporation (NASDAQ:SOLV) is a healthcare information services company that develops, manufactures, and commercializes solutions that address critical and customer patient needs. It offers solutions for advanced wound care. It is one of the largest providers of sterilization devices, wound dressings, medical tapes, and other hospital consumables. Solventum Corporation (NASDAQ:SOLV) reported first-quarter net sales of $2.02 billion.
Trian Fund Management is believed to have built a position in the 3Ms healthcare spinoff. The activist investor has also contacted the board to discuss ways to unlock shareholder value by reaccelerating organic growth and restoring margins. The activist investor is also pushing for asset sales.
Solventum Corporation (NASDAQ:SOLV) has been down by about 13% in the year. As of the end of the first quarter, 10 hedge funds held stakes in the company, according to Insider Monkey.
38. Barrington Capital at TriMas Corporation (NASDAQ:TRS)
Stock Return: -7.98%
S&P 500 Return: 15.1%
Investment date: 11/12/2024
Number of hedge funds holding stakes: 16
TriMas Corporation (NASDAQ:TRS) is a consumer cyclical company that designs, develops, and sells products for consumer products, aerospace, and industrial markets. It operates through the aerospace, packaging, and specialty products segment.
Barrington Capital is pushing TriMas Corporation (NASDAQ:TRS) to concentrate on its packaging division and sell off assets not essential to its core operations as part of its activist campaign. Additionally, it wants the company to consider divesting its Arrow Engine specialty businesses while the energy sector is vital. It should also consider selling its second specialty business, Norris Cylinder.
The stock is down by about 1% for the year amid the restructuring push. 16 out of the 920 hedge funds tracked by Insider Monkey held stakes in TriMas Corporation (NASDAQ:TRS) as of the end of Q1 2024.
37. Third Point at SiriusPoint Ltd. (NYSE:SPNT)
Stock Return: 55.76%
S&P 500 Return: 32.14%
Investment date: 12/04/2023
Number of hedge funds holding stakes: 17
SiriusPoint Ltd. (NYSE:SPNT) operates as a multi-line insurance and reinsurance products and services company. It offers insurance and reinsurance services in the aviation, marine, and energy sectors. The stock rallied by more than 96% last year and is already up by 25% for the year.
The rallies have come at the back of growing talk that Dan Loeb’s activist hedge fund Third Point is contemplating taking SiriusPoint Ltd. (NYSE:SPNT) private. While the current management has taken the necessary steps to position the company for long-term success, the activist investor believes it is better suited to execute its strategy as a private company.
SiriusPoint Ltd. (NYSE:SPNT) has acknowledged interest from the third point of view to take the company private. A total of 17 out of 920 hedge funds tracked by Insider Monkey held stakes in the company as of the end of the first quarter of 2024.
36. Trian Fund Management at Rentokil Initial plc (NYSE:RTO)
Stock Return: 11.11%
S&P 500 Return: 1.34%
Investment date: 11/06/2024
Number of hedge funds holding stakes: 20
Rentokil Initial plc (NYSE:RTO) is a pest control company that offers solutions for controlling rodents flying and crawling insects. It also provides hygiene services, including provision and maintenance products. While Rentokil Initial plc (NYSE:RTO) is up by 19% for the year, Nelson Peltz’s Trian Partners has amassed significant stakes in the company and seeks to engage management on ideas and initiatives to unlock value.
It is highly expected that the activist investor will push for board seats to communicate with shareholders and push for changes directly. Rentokil Initial plc (NYSE:RTO) was the subject of increased institutional holding as 20 hedge funds accumulated positions in the stock in Q1 2024, up from 15 as of the end of 2023, according to the Insider Monkey database.
35. Politan Capital at Azenta, Inc. (NASDAQ:AZTA)
Stock Return: 22.96%
S&P 500 Return: 20.87%
Investment date: 15/08/2023
Number of hedge funds holding stakes: 21
Azenta, Inc. (NASDAQ:AZTA) is a medical instruments and supplies company that provides biological and chemical compound sample exploration and management solutions for the life sciences market. Activist investor Politan Capital has targeted the company that engages management regarding business operations, financial conditions, and strategic plans.
Given that the activist investor owns 6.87% of the company’s shares, it wields the power to push for strategic changes to unlock significant shareholder value. Amid the activist campaign, Azenta, Inc. (NASDAQ:AZTA) is up by 22.96%, while the number of hedge funds holding stakes stood at 21 as of Q1 2024, according to the Insider Monkey database.
34. Icahn Capital at JetBlue Airways Corporation (NASDAQ:JBLU)
Stock Return: -2.76%
S&P 500 Return: 12.54%
Investment date: 13/02/2024
Number of hedge funds holding stakes: 23
JetBlue Airways Corporation (NASDAQ:JBLU) is an industrial company that provides air transport services. It is the latest company to be targeted, Carl Icahn, who has built a reputation as a corporate raider and activist shareholder. After disclosing a stake of about 10% early in the year, the hedge fund manager secured two board seats at JetBlue Airways Corporation (NASDAQ:JBLU).
It still needs clarification on the strategy Icahn wants to implement at the airline or the change he is pushing to unlock value. JetBlue Airways Corporation (NASDAQ:JBLU) is already up by about 21.9%. According to the Insider Monkey database, the number of hedge funds holding stakes in the company increased to 23 in Q1 2024 from 20 as of the end of last year.
33. Barrington Capital at Hanesbrands Inc. (NYSE:HBI)
Stock Return: 18.4 9%
S&P 500 Return: 28.12%
Investment date: 15/05/2023
Number of hedge funds holding stakes: 23
Hanesbrands Inc. (NYSE:HBI) is a consumer goods company that designs, manufactures, and sells apparel. It operates through Innerwear, Activewear, and International. Barington Capital has been pursuing an activist campaign against the company, pressuring it to reduce costs, generate cash, and pick up a new CEO to steer it in a new strategic direction.
“We believe that Hanesbrands currently sits at a critical juncture and must immediately focus on cash generation and debt reduction in order to create long-term value for shareholders. We believe that management’s largely ineffective response to recent market challenges is responsible for the company’s rapidly deteriorating results. Further, Hanesbrands’ excessive debt burden appears to amplify the impact of poor operating performance on Hanesbrands Inc. (NYSE:HBI) ‘s ability to create value for shareholders,” said Barington’s CEO, James Mitarotonda.
Hanesbrands Inc. (NYSE:HBI) is up by 3.28% year to date as it tries to bounce back amid the activist campaign. 23 out of the 920 hedge funds tracked by Insider Monkey held stakes in the company as of the end of Q1 2024.
32. Politan Capital at Masimo Corporation (NASDAQ:MASI)
Stock Return: -9.34%
S&P 500 Return: 22.19%
Investment date: 16/08/2023
Number of hedge funds holding stakes: 25
California-based Masimo Corporation (NASDAQ:MASI) manufactures and markets patient monitoring technologies, automation, and connectivity solutions. The company has been embattled in a fierce battle with activist hedge fund Politan Capital that has already found its way into courts of law.
The hedge fund, which holds an 8.9% stake in Masimo Corporation (NASDAQ:MASI), is pushing for management changes and is urging shareholders to vote for its board nominees as it looks to influence its strategic direction. Masimo, on its part, has sued the hedge fund, insisting it must correct material misstatements and omissions in proxy material.
Amid the bitter standoff, Masimo Corporation (NASDAQ:MASI) has been down by 2.7% for the year. According to the Insider Monkey database, the number of hedge funds holding stakes in the company dropped to 25 in Q1 2024 from 34 as of the end of 2023.
31. Browning West at Gildan Activewear Inc. (NYSE:GIL)
Stock Return: 28.76%
S&P 500 Return: 12.64%
Investment date: 21/01/2024
Number of hedge funds holding stakes: 27
Gildan Activewear Inc. (NYSE:GIL) is a consumer cyclical company that manufactures and sells apparel products. It provides activewear products, including T-shirts, fleece tops, and sports shirts. The company has been the subject of an activist campaign spearheaded by institutional investor Browning West.
The activist institutional investor has succeeded in pushing for the resignation of the 12-person board, ending a contentious proxy battle that has also resulted in the restoration of former CEO Glenn Cham Andy. The restoration comes on the activist hedge fund insisting the previous board completely disregards sound corporate governance.
After remaining flat for the better part of 2023, Gildan Activewear Inc. (NYSE:GIL) is moving, gaining 25% in 2024 amid the ongoing activist campaign. Additionally, 27 out of 920 hedge funds tracked by Insider Monkey held stakes in the apparel manufacturing company as of Q1 2024, up from 19 as of the end of last year.
