A recent study looking at the performance of share prices for 245 different corporations that have been targeted publicly by activist funds has uncovered new data, and the findings show that activist investors are overall enjoying greater success in the United Kingdom than in Europe and the United States.
The new research studied campaigns that began between January 1, 2017, and February 28, 2020. It compared market indices to share price performance for the targeted companies.
UK public limited company (PLC) shares targeted by activist investors outperformed against market indices by around 3.6 per cent over two years, in comparison to 2.7 per cent outperformance for US-based companies and Europe’s underperformance rate of -3.3 per cent.
Over the initial year from when the activist investor campaign started, UK companies performed in line with market indices, but campaigns in the US underperformed compared to the market by -4.3 per cent and European firms by -8.0 per cent during the same time period.
Governance campaigns underperforming within the first year is an important factor leading to underperformance overall in Europe and the US. Activists have pushed for improvements in governance in 70 per cent of US campaigns and 74 per cent in European campaigns, but only 41 per cent in UK campaigns.
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