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The Celebrity Activist Investor Is Going Extinct
Turns out you don’t need a tough activist reputation to spur change at companies anymore
By Lauren Thomas
Dec. 26, 2024 9:00 pm ET
An era of big-name activists with fiery personalities waging noisy proxy battles and wielding brash tactics to win board seats is over.
Carl Icahn, facing attacks on how he manages his own publicly traded firm, has slowed his fire. Nelson Peltz, fresh off losing a battle with Disney, is planning to hand his firm to his less pugnacious son and others. Bill Ackman and Jeff Ubben have walked away from fights. Dan Loeb hasn’t had a big proxy war in years.
In their stead is a newer crop of activists who are smaller in size, less well known and often less eager to brawl.
The activist shift is coupled with changes on the corporate side. After years of activists hammering the same points over and over, many boards are more alert. They are moving faster in cases of underperformance, firing CEOs, striking deals and more willing to embrace activists who do come along.
The results: The number of proxy fights that go all the way to a vote is down. Settlements with companies are up, and coming faster than ever. And the returns of the activist funds are generally underperforming.
With the proverbial low-hanging fruit picked, and fundraising difficult, it is unlikely a new activist giant will emerge to strike fear each time it appears in a shareholder roster.
Nelson Peltz, of Trian Fund Management, sees himself as a ‘constructivist.’
Nelson Peltz, of Trian Fund Management, sees himself as a ‘constructivist.’ Photo: Marco Bello/Bloomberg News
“The industry in most cases is becoming much more institutionalized,” said Charlie Penner, a longtime activist investor who launched a new firm with a name purposefully meant to sound anonymous: Ananym. “It’s not as personality-driven anymore.”
For the past two years, nearly two-thirds of agreements between companies and activists have been struck privately, according to an analysis by FTI Consulting. Even when things get heated, they are cooling quickly. It took only an average 34 days for an investor to get a settlement after publicly demanding board seats in 2024, down from 68 days in 2023, FTI found.
Take some of the settlements that happened in recent months with investors: CVS Health quickly settled with Glenview Capital Management, which isn’t typically an activist.
Ancora Holdings took on Norfolk Southern in a proxy fight earlier this year—winning three board seats—and later struck a settlement deal to expand the board and avert a second proxy battle at the railroad operator. Engaged Capital struck an agreement last year with burger chain Shake Shack. Sachem Head Capital Management landed a spot on communication-technology firm Twilio’s board in April. Anson Funds recently snagged a seat on the board of cloud-software provider Five9.
Penner was at Engine No. 1 when that little-known firm successfully challenged the board of Exxon Mobil and he previously worked at Jana Partners. He launched Ananym Capital Management this year with Alex Silver, formerly of another firm, P2.
An “ananym” is a pseudonym made by spelling one’s name in reverse. Penner said they chose it in part to underscore today’s dynamics. They recently found a first target: pushing Henry Schein, a healthcare products distributor, to change its board.
“It shouldn’t be about ego or whatever,” Penner said. “It should be about having good ideas and a good process.”
Shareholder activism traces its roots back to the 1980s, when investors started to buy up stakes in companies and agitate for changes ranging from management shake-ups to strategic breakups. Into the 1990s, the investors were commonly referred to as “corporate raiders.”
In the last few decades, they have worked to shed their negative stigma. Peltz, founding partner of Trian Fund Management, has waged some of the biggest proxy fights ever, including at Procter & Gamble in 2017 and Disney in 2023. He is also among those labeling themselves as “constructivists,” for being helpful rather than antagonistic.
They pitch complex plans for turnarounds and corporate shifts, not only financial moves aimed to juice the stock immediately. By proving they do their homework, firms like Elliott Investment Management, Starboard Value and Jana have won more allies.
But companies and their defenders still scoff at the constructivist idea and believe activists themselves can be disruptive.
That is one reason activists propose allies for boards. Fifteen or 20 years ago, the big-name fund managers would mostly nominate themselves for board seats, said Amy Lissauer, global head of activism- and raid-defense at Bank of America.
“Activists now are identifying great independent candidates…the highest quality I have seen,” Lissauer said.
Companies play defense first
Company attitudes have also helped reduce big activist brawls.
Management teams are now more cognizant about the possible threat and are working to stay ahead of it by swapping directors and executives and pursuing deals.
In 2024, a number of companies including Boeing, Under Armour and Intel have ousted their CEOs without the known presence of an activist.
“There were many sleepy C-suites and passive boardrooms, and it took an activist waging a public campaign to shift the mindset,” in years past, said Mary Ann Deignan, head of Capital Markets Advisory at Lazard, where she helps defend companies against activist attacks.
CVS this fall ousted its chief executive and concluded a strategic review, then struck a deal to add Glenview founder Larry Robbins to its board of directors. Robbins had only twice in 24 prior years used an activist playbook.
It is also true that many companies have grown more fearful of losing because of a recent change in the proxy voting procedures, leading them to accept the activists quickly.
The pressure for returns
Many of the new-age activists worked for the first generation. Now they need to raise money on their own reputations, which has proven difficult.
Activist hedge funds as a group saw net outflows in four out of the last six years, though are seeing a slight bump in 2024, according to HFR, a hedge-fund data tracker.
Activist-focused hedge funds also generally tend to underperform the broader market. Through early December of this year, activists were up 6.4% versus the S&P 500’s rise of over 30%, according to HFR.
“It’s becoming increasingly harder for activists to raise money,” said Michael Levin, founder of consulting firm the Activist Investor. As a result, some firms realize “it doesn’t pay to be quite as distinctive or outspoken.”
There remain exceptions and big fighters, including Elliott and Icahn.
But Icahn had his own Icahn Enterprises hit by short-seller accusations that he was overvaluing some positions. Icahn has denied the claims, but has dialed back his activity.
Peltz has seen his firm’s assets under management shrink and is preparing to step back himself, handing over more responsibility to a younger generation of leaders, including his son, Matt Peltz, as well as Josh Frank and Brian Baldwin. Some wonder whether Trian will continue launching high-profile activism campaigns when the elder Peltz is no longer at the helm.
(Baldwin landed a seat on U.K.-based Rentokil Initial’s board in October, shortly after Trian disclosed a position in the pest-control maker.)
More may go the way of Ackman, once one of the biggest activist managers. After a series of losses, he decided to be less vocal and more friendly about investments.
“It makes our job easier and more fun, and our quality of life better,” Ackman penned in his annual letter to Pershing Square investors in 2021. “So, if it is helpful to call this quieter approach Pershing Square 3.0, let it hereby be so anointed.”
Write to Lauren Thomas at lauren.thomas@wsj.com
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