Activist hedge funds have big companies on their drawing boards, and so far, it’s been the year of the “super campaign.”
These funds buy up big chunks of a company’s stock and use their ownership to influence management and boards to cut costs, find merger partners or return money to shareholders.
Through the first half of the year, there was a 66 percent spike in the number of activist campaigns targeting companies with market values of $10 billion or more, according to the research firm Acuris, who deemed this year the return of the “super campaign” in a recent report. This is even as the overall number of new activist campaigns, 100, was 13 percent less than the first half of 2016.
Companies caught up in the activism so far this year include some of America’s most recognizable brands, such as Procter & Gamble, General Motors, Tiffany and Whole Foods, and funds run by some of Wall Street’s most prominent investors, like Nelson Peltz of Trian Partners and Barry Rosenstein of Jana Partners.
The number of campaigns begun at companies with market values greater than $5 billion also jumped 70 percent. While in deal terms the numbers are small—there were 10 campaigns at the biggest companies and another 17 at the $5 billion and up group. But the investors have shifted their focus slightly away from smaller companies. There were 67 campaigns at companies with market values of $300 million and up, compared to 70 in the first half of 2016.
The biggest grievance — reflected in 36 percent of the activist demands — was related to a company’s board composition, Acuris said.
Other popular demands included changes to a company’s governance (22.6 percent ) and cost cutting (14.5 percent and the fastest growing category).
Some 12 percent of campaigns, such as the one Jana began in the spring with Whole Foods, were aimed at strategic changes. In June, the grocery chain agreed to sell itself to e-commerce giant Amazon.com for $13.7 billion, and Jana sold its 26 million Whole Foods shares shortly after that announcement for a $300 million profit.
Trian took a $3.5 billion stake in Procter & Gamble earlier this year and in July announced it was trying to get a seat on the board for Peltz so he could push for changes that could boost sales. The maker of everything from Bounty paper towels to Gillette razors and Pampers diapers has scheduled its shareholder meeting for October.