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Insofar as they challenge underperforming companies to do better, activist investors are good for markets. So the fact that there are lots of them around is cheering news. The UK — where lowly valuations come with clear codes and rules — appears to be a particularly favourable stomping ground.
Globally, a total of 61 public campaigns were launched in the third quarter, according to Barclays, up from 36 the prior year. The 191 launched since January puts this year on course to top any in the past decade.
Turbulent markets and uncertain geopolitics have made it more likely that a company’s market capitalisation should diverge, at least temporarily, from its long-term value. Investors’ obsession with AI-related stocks hasn’t helped other sectors either, drawing away both cash and attention. The return of dealmaking and the gradual reopening of IPO markets help shareholder agitators too. Calling for boardroom seats positions an activist to influence strategy, but it is divestments that often crystallise value.
The UK’s well-understood corporate codes have long made it the standout destination in Europe for activists. An additional spur right now is its depressed local capital market.
As a result, 52 UK companies faced activists in the 12 months to September, according to Diligent data, up from 36 in the previous 12 months. The agitators are getting punchier too, with a near 50 per cent jump in demands to remove bosses or other board members, not just to swell their ranks.
This trend shows no signs of abating. Campaigns successfully targeting the market’s biggest fish, such as Elliott’s in oil company BP, are likely to encourage smaller players too. Unilever has been slower work for Nelson Peltz, who has been on the board of the consumer brands group since 2022. Yet its new boss recently pledged a deeper overhaul, suggesting performance improvements are getting on track.
There is also no shortage of potential targets. Scan UK companies with more than £1bn in market capitalisation, and with depressed share prices — say, below their 50- and 200-day moving averages — and some 70-plus names pop up. Some like drinks group Diageo and high street stalwart Marks and Spencer have well-documented issues. Others include defence group Qinetiq, struggling to keep up with general enthusiasm for the sector, and private equity firm 3i, where a short seller is circling. The owner of the London Stock Exchange also makes the list, with a one-fifth fall in its shares despite strong performance from peers.
There’s a lot to put off an activist between a quick screen and laying their reputation on the line, of course, but the conditions are improving. UK companies may wish they could lift valuations without activists bothering them. Investors, however, stand to benefit from all the cage-rattling.
jennifer.hughes@ft.com
