The Wall Street Journal’s Gregory Zuckerman reported this morning that many activist investors may need to rethink their agendas after struggling over the past year. In the article, Zuckerman states that “it's hard to scare a target when you are on the run yourself. But that is the awkward position in which activist investors find themselves…Activist funds lost almost 10% in the first two months of this year, after falling almost 31% last year, according to Hedge Fund Research.” Despite a tough go, activists rebounded over March, gaining almost 10%.
Instead of the traditional activist agendas such as M&A and share buybacks, Zuckerman thinks that activists may be wise to direct their attention towards cost-cutting. Overpaid management teams at poor performing companies might have to start feeling their shareholders’ pain. The article noted that Carl Icahn has been following such a strategy with Amylin Pharmaceuticals and that Ironfire Capital is rumored to be preparing for similar campaigns. |
