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The Activist Revolution

The Activist Revolution by JPMorgan

Understanding and navigating a new world of heightened investor scrutiny

No recent development has influenced firms’ strategic and financial decision-making as profoundly as the surge in shareholder activism following the global financial crisis. From a few activist funds managing less than a total of $12 billion in 2003, the activist asset class has ballooned to more than $112 billion in assets under management for activist Hedge Funds with most of that growth occurring since 2009 (see Figure 1). These figures are in addition to the significant capital focused on activist strategies by multi-strategy funds. Today, more than 10 activist funds (activist or multi-strategy funds) manage over $10 billion each, or about as much as the entire asset class 10 years ago for each fund. This significant inflow of capital into the asset class comes with immense pressure to put capital to work quickly, and in ever-larger campaigns. Adding to the dynamism of this asset class, new funds are entering the shareholder activism arena at a rapid pace (typically lieutenants of established activist funds or non-activist fund managers pursuing activism as a new strategy) and traditional institutional investors increasingly support—directly or indirectly—shareholder activist campaigns.

Activist Revolution

While other hedge fund categories may affect companies’ stock prices over time, activist funds seek a direct impact on the day-to-day...