Shareholder activists have targeted far fewer companies so far this year, yet they have won a record number of board seats as they focus more on changing companies from within, according to
Activist hedge funds, which include
Nevertheless, activist shareholders have won 107 seats so far in 2016, one more than last year's annual record and a 22 per cent increase compared to same period in 2015, as they focused on targeting companies with a market value below
"Activists were more risk averse and launched fewer campaigns in the first half of 2016 due to market volatility in early 2016 and poor returns in 2015 that left many funds exposed to redemptions," Jim Rossman, a
"We believe that the increase in the number of activist-nominated directors sitting on the boards of major companies could in the long term fundamentally reshape boardroom decision-making, and the receptivity to shareholder arguments for change."
A Preqin survey published in August showed that institutional investors are increasingly unhappy with activist hedge funds, but there is little evidence that they plan to challenge them.
Among the investors surveyed, 100 per cent said that activist strategies had fallen short of their expectations in the first half of this year but only 9 per cent of them plan to decrease their exposure to the strategy, Preqin's data showed.
Activist strategies lost investors 5.6 per cent from July last year to this past June, according to Preqin. Their underperformance was driven by situations such as
Some high-profile activists have struggled. After generating a 37 per cent return in 2014,
Overall, activist funds are now retrenching and mounting fewer campaigns against large-cap companies and are spending more time winning board seats on smaller companies,
Some strategies have come under scrutiny, with
Pushing for more buybacks or dividends is one approach that has worked in the past. Billionaire activist investor
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