The Wall Street Journal-20080216-Investor Activism Tops Last Year-s Record Pace

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Investor Activism Tops Last Year's Record Pace

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Efforts by activist investors to fight for board seats, oppose mergers and otherwise shake up companies are on track to beat last year's record levels, contrary to expectations that activity would dry up because of unstable market conditions.

There have been 72 campaigns waged by activists so far this year, as of Feb. 11, with targeted companies ranging from Countrywide Financial Corp. to New York Times Co. Last year, when shareholder activism hit record levels, there were just 54 campaigns waged over the same time period, according to FactSet SharkWatch, which tracks proxy contests and corporate-takeover defenses.

Hedge funds continue to be big participants. More than half, or 38, of the campaigns so far this year were initiated by hedge funds, compared with 21 during last year's period, according to FactSet SharkWatch.

Activist investors seek to boost stock prices by forcing changes such as the sale of business units, often by winning board seats.

"People were speculating the credit crunch would take some of the wind out of the sails of the activists, but it hasn't," said Christopher Young, head of mergers-and-acquisitions research in the governance unit of RiskMetrics Group.

"Weak markets provide opportunities for activism," he said. "If the market goes sideways or down, activism might be seen as one of the few ways to go in and provide a return."