Starboard wins the award for top activist firm for its work on Darden Restaurants
Carl Icahn and Bill Ackman are arguably the two activist investors who grab the most headlines. However, they aren’t at the top of the list in terms of their impacts in 2014, according to the Activist Investing Annual Review 2015.
In fact, Icahn was at the top of the list last year, but his firm dropped down to the fourth spot in this latest review.
Activism on the rise
Activist Insight and Schulte Roth & Zabel LLP put together the review. They found that shareholder activism continues to rise and noted a significant jump in the number of campaigns. They reported that in 2014, a total of 344 companies worldwide were targeted by activists. In 2013, only 291 companies were targeted.
“Activist funds proved more numerous and more successful than ever in 2014,” said Activist Insight editor Josh Black. “The continued growth in activist assets and in campaigns at U.S. companies, in particular, suggests that they are far from reaching the limits of their impact.”
The two firms put together a list of the top ten activist firms based on their impacts on the investment community. To create the list, Activist Insight looked at the number of campaigns, the average size of their targets, their new investments and “an annualized return formula.”
Starboard takes this year’s title for top activist
Starboard Value led the list this past year. The firm ran 11 public campaigns, and the average market capitalization of its targets was about $6.5 billion. One of the biggest wins for the firm was the fight with Darden Restaurants, in which Starboard managed to replace every single one of the company’s board members through a proxy fight. The firm saw an average annualized total follower return of 39.9%.
Dan Loeb’s Third Point was in second place, moving up one spot this year, with only five public campaigns, but the average market cap of his targets was $46.45 billion. The firm’s return rate was 15.8, and Loeb has proven to major corporations that he’s not one to mess with.
“When they see Loeb coming, CEOs face a dilemma,” the folks at Activist Insight wrote in their review. “Stay and fight at the risk of permanent damage to their career, like Sotheby’s Bill Ruprecht, who announced his retirement six months after a bruising proxy contest, or offer a settlement and keep the fight within the boardroom, like Dow Chemical’s Andrew Liveris?”
Jana Partners landed in third place, running eight public campaigns and seeing a return of 45%. The average market cap of the firm’s targets was $8.9 billion.
Carl Icahn has a losing year
One of the great media darlings is Carl Icahn, but return-wise, he ran into some trouble in 2014. The review says he was “almost as prolific as ever in 2014,” but his bad bets on the energy market caused him problems. His average annualized total follower return was -4.15%.
He ran nine public campaigns in 2014, compared to 14 in 2013, targeting companies with an average market cap of $84.5 billion. Icahn’s big campaigns this past year were eBay, Apple and Hertz.
GAMCO, Elliot in fifth and sixth
In fifth place on the list was GAMCO Investors, which the reviewers note doesn’t really like to refer to itself as an activist. However, the firm ran 11 public campaigns, most notably Wausau Paper, Tredegar and Superior Industries.
Elliott Management, headed up by Paul Singer, remained in sixth place on the list. Singer’s biggest successes were in Riverbed Technology and Compuware. The firm also recently won a couple of board seats at EMC just weeks ago.
Bill Ackman roars into 2015
The folks at Activist Insight said if returns were the only metric they used in building their top ten list, Bill Ackman’s Pershing Square Capital Management would have won. The firm’s concentrated portfolio was up 40% for the year.
“Almost everything went right for Bill Ackman’s fund, whether it be a downturn in Herbalife stock, the sale of Allergan to Actavis for a welcome premium or the surge in Canadian Pactific stock (before oil prices began to hit forward earnings expectations),” the report read.
Ackman ran seven public campaigns against companies with an average market cap of $21.6 billion.
Trian, ValueAct, Corvex round out the list
In eighth place was Nelson Peltz’s Trian Partners, which ran six public campaigns targeting companies with an average market cap of $ billion and enjoyed an average annualized total follower return of 12.4%. The firm has already set to work in 2015, fighting for board seats at DuPont. Other strong campaigns for Peltz in 2014 were PepsiCo, Legg Mason and Tiffany.
ValueAct Capital was less active than usual in 2014, running only three public campaigns but enjoying an average annualized total follower return of 17.5%. The firm generally stayed out of the fight between Allergan and Valeant even though it had a stake in Valeant. This year is already shaping up to be a more active year, as ValueAct is seking board seats at Allison Transmission Holdings and Armstrong World Industries.
In tenth place is Corvex Management, which also ran three campaigns but had a healthy average annualized total follower return rate of 38.7%. The firm won a campaign against CommonWealth REIT and Williams Companies. Corvex also scored a big win when Signet Jewelers merged with Zale, although the firm swung and missed with Walgreens, which decided not to do a tax inversion deal in its proposed merger with AllianceBoots.