February 29, 2016

2016 Shareholder Activist Themes & Opportunities

The latest survey from FTI Consulting and Activist Insight explored themes and opportunities activists expect in the coming year, and the investing practices and strategies they plan to employ. Results are based on input from 24 activist firms that have collectively engaged in over 1200 events in more than 10 countries.

Key findings include:

  • Energy sector was identified among activists as the most significant activism opportunity based on undervaluation, followed by the industrial sector.
  • Healthcare ranked third, but is tempered by a signficant percentage of respondents reporting limited opportunity in that area – which the authors attribute to debate among activists as to the likelihood of consolidation in the healthcare industry.
  • Most activists believe that the best activism targets are micro- to mid-cap stocks rather than mega-caps, with the greatest activity expected among small caps.
  • Activists claim to have much longer holding periods than they’ve exhibited in the past – an average of 3 years compared to an average of 1.5 years two years ago, correlating with an expected increase in operational (as opposed to event-driven) activism – assuming the longer holding periods stick.
  • 80% of investors think merger activism will increase in 2016.

See our earlier blog on Part I of the survey released in September, which addressed the expected cooperation of institutional investors with activist campaigns, and these recent articles, “Why Wall Street’s campaign to enrich shareholders could be bad for everyone else” and “Investor Activism Doesn’t Work With Tech Companies.”