Activist investor campaigns at public companies were up globally in the first half of 2020, but they have been less successful than in years past, a report Monday from CGLytics shows.
There were 797 campaigns in the first half of the year, 38% of which were unsuccessful or withdrawn and 9% of which were successful or settled, according to the report. The number of failed campaigns in 2020 stood at 283, up from 185 in 2019 and 132 in 2018.
In 2019, the number of campaigns increased to 893 from 655 the year prior, and 2020 could eclipse it, CGLytics said.
"In a year that has already been difficult enough for many businesses to navigate, the rise in activist investors in 2020 has created yet another area of disruption for many," said Aniel Mahabier, CEO of CGLytics, in a statement.
In the report, CGLytics said: "Whether activist campaigns are successful or not, it is important to note that any activist campaign brings negative publicity, takes time to arrange, and in many ways disrupts the activity of a business and its management."
While hedge funds and private equity firms are the traditional activist investors, the report said more institutional investors over the past decade have become active in seeking changes to companies' governance structures. "What we're seeing is traditional investors change their position rapidly from passive to active engagement; an approach that looks set to continue well into the future, particularly in (the second half) of 2020 given high share price volatility and the ongoing impact of COVID-19," Mr. Mahabier said.
Governance issues such as shareholder rights, board tenure, independence, diversity and expertise are attracting activist attention, CGLytics found.