Future of activist investing

Based on the most helpful WSO content, here's what you need to know about the future of activist investing:

1. Institutional Investors:

   • Focus: Primarily on changes in corporate governance.
   • Outcome: Seen little payoff to their activism.

2. Individual Activists:

   • Focus: Target unprofitable, poor-performing companies.
   • Strategy: Agitate for deploying assets to more profitable uses and higher dividends.
   • Outcome: Survivors have generated superior returns.

3. Hedge Fund Activists:

   • Behavior: More like passive value investors.
   • Outcome: Often fail at getting companies to change; excess returns, if any, accrue to a few top investors.

Strategies for the Future:

• Follow the Activists:
  • Invest in companies targeted by activist investors.
  • Note: Bulk of excess returns are earned in the days before or on the announcement of activism.
  • Long-term: Focus on the right activists for potential gains.

Summary:

• Activist investing will likely continue to evolve with a focus on corporate governance, profitability, and strategic asset deployment.
• Success will depend on the ability to identify and follow effective activists.

This analysis is based on the highest-ranked content on WSO and reflects the trends and outcomes observed in recent years.

Sources: Is Anyone Bullish on the Future of Asset Management???, Activist Value Investing: Be Your Own "Change" Agent, Is Anyone Bullish on the Future of Asset Management???, In the near future, what will be the fastest growing Asset Classes and practices in the financial industry?