Activists on the March

For those observers predicting activist hedge fund managers would quietly go home and wait out the current credit crunch and lackluster deal market (you know who you are), I present a recent report put out by FactSet SharkWatch.

The activist hedge fund manager research firm calculates that there were a record number of 152 new activist campaigns in the U.S. alone during the first quarter of the year. According to FactSet SharkWatch, that record beat out the previous quarterly record-- the last three months of 2007.

“These campaigns include formal proxy fights as well as other solicitations and activist campaigns typically calling for action to enhance value, but also include to a lesser extent those aimed at enhancing corporate governance practices,” the research firm explained in an April 2nd report.

The 152 campaigns included 50 new proxy contests, “the most announced in any quarter since we began tracking proxy fights in 2001,” FactSet reported. (The previous most active quarters for new proxy fights were the first quarter of 2007 and 2006 with 40 and 32, respectively)

Along with the new proxy contests, activists obtained a director positions at 32 companies. Activists that obtained board seats through proxy contests between January and March? FactSet lists: Breeden Capital Management LLC, Crescendo Partners LP, Harbinger Capital Partners, MCM Management LLC, Pershing Square Capital Management, Ramius Capital Group, LLC, Relational Investors, LLC, Steel Partners II, L.P., and Third Point LLC.

Why the huge expansion of activist investing? Blank Rome LLP partner Barry H. Genkin explains it this way: “What I think is going on is a lot of hedge funds are finding it difficult to produce the returns they have traditionally been able to generate, particularly as stock prices drop. They have had to figure out ways to improve returns and many have found the activist strategy a means to that end. Activists have been very successful to producing better than average returns.” -- Ron Orol