Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and other major technology companies are increasingly finding themselves the target of activist investor campaigns. Will this trend continue, or have activist investors had their fill?

Bernstein analyst Toni Sacconaghi and the rest of the firm’s team took a closer look at activist campaigns targeting some of the biggest tech companies in the world. They think the trend will continue for the foreseeable future and have identified some potential targets.

Apple, Microsoft, Yahoo among the top activist targets

Of course Apple Inc. (NASDAQ:AAPL) has been the talk of Wall Street for some time as activist investor Carl Icahn moves in on it. He’s pushing for a greater share buyback and has put a non-binding proposal on the proxy at Apple’s shareholders’ meeting this month. The campaign against Apple Inc. (NASDAQ:AAPL) certainly isn’t unique. Activists putting the pressure and Microsoft Corporation (NASDAQ:MSFT) and Yahoo! Inc. (NASDAQ:YHOO) had similar goals in mind.

As these campaigns demonstrate, activists have been focusing on capital allocation or cash return, possible spin-offs or cost cutting. Bernstein analysts also note that relatively small stakes have resulted in activists landing a spot on these companies’ boards. For example, ValueAct Capital had a less than 2% stake in Microsoft Corporation (NASDAQ:MSFT) and was able to secure a seat. A look at several of the major activist campaigns which have been launched against major technology companies over the last several years further demonstrate this trend:

tech Activist

Of course the results of each activist campaign aren’t always positive. And yet, investors tend to be intrigued when activists get involved. Here’s a look at the relative returns around the announcement of the activist stake and through two years after:

Apple tech activist

As you can see, the returns tend to be pretty positive in the first month or so of the campaign. Where they run into problems tends to be later on.

The Bernstein team thinks activists will probably continue to see activists target campaigns over the next year or two, particularly because the sector in general has a relatively low valuation, which provides a “margin of safety.” In addition, capital allocation within the sector tends to be pretty inefficient, and many of these companies are dealing with massive growth or legacy problems.

Which companies might be targeted next?

The analysts also compiled their own list of potential targets for activists moving forward. They looked at four criteria to determine these possible targets: “serial stock performance;” a large amount of net cash compared to market capitalization; poor merger and acquisition history; and ownership profile.

The two technology companies they see as being the most likely candidates for activist pressure include Citrix Systems, Inc. (NASDAQ:CTXS) and EMC Corporation (NYSE:EMC). They see Citrix as being appealing because it has “significantly underperformed” the overall market and it is seeking a new CEO. They see spin-offs as being possible and say activists could push for more cost cutting measures, more shareholder-friendly cash return policies and improvement in the “go-to market model.”

They see EMC Corporation (NYSE:EMC) as being a potential target because its stock price has been struggling and it has quite a bit of extra cash. In addition, they think it could spin off VMware and maybe Pivotal as well. However, activists might be less likely to target this company because management is well-respected and Pershing Square sold its stake in the company with no visible impact.

BlackBerry, Nokia could be targets, but…

One of the top names on their list is BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), which has been a sinking ship for some time. However, they put it further down the list because of structural challenges. They believe a break-up of the company would provide value but see it as unlikely and think the window of opportunity for a break-up is closing rapidly and will be shut as early as within the next several quarters.

Another name they mention is Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), and they note that Third Point has been active in it since October. However, they think the company’s valuation already reflects the best possible outcome, so they think the company may not be as likely to be pressured as some of the other companies on their list.