For decades, the defining perception of investor activism was aggressive hedge funds motivated by short-term returns utilising highly aggressive and novel tactics to demand change. However, perceptions have shifted, driven on the one hand by the failings of corporates and their management, and on the other by a growing acceptance of the value that activism can deliver. Today, many institutional investors will back campaigns that improve governance, capital allocation and strategic focus.
How Activism Found Its Footing
Shareholder activism really took off in the United States in the early 2000s, led by figures such as Carl Icahn, Paul Singer and Daniel Loeb, who, to this day, influence the strategy and direction of companies across the United States, Europe and Asia.
The Global Financial Crisis of 2008 acted as a catalyst as shareholders lost patience with conglomerate discounts, weak governance and poor capital allocation. Since then, activists have shown that even the largest corporates could be challenged and the focus shifted towards strategy and governance rather than break-ups alone.
Why the UK Became a Target
As with many things, activism soon found its way to the UK, which has since become one of the most targeted markets globally. This is driven by structural factors, such as strong corporate governance principles and the rule of law, which provides security and avenues for redress against target companies, as well as depressed valuations among UK equities relative to global peers.
According to Goldman Sachs, UK-listed companies are generally less profitable than their US peers, and trade at a steep discount to them on earnings multiples. In fact, the FTSE 100 trades on a forward price-to-earnings multiple of roughly half that of the S&P 500. As a result, investors see opportunities to unlock value through direct, activist engagement, which often plays out in public.
Bloomberg recorded 31 new campaigns in the UK in the first half of 2026 alone, up 63% on the prior year, and there are several examples of the demands being made. The UK investment trust sector has been particularly susceptible, with Boaz Weinstein’s Saba Capital launching campaigns against trusts accused of poor governance, ineffective boards and depressed returns for shareholders. These campaigns have led to the wind-up of certain funds, fee reductions and greater scrutiny of boards and how they seek to drive value for shareholders.
Weinstein’s campaign, however, also provoked a significant backlash rooted in the historic perceptions of activism, particularly the idea of an outside force, motivated by short-term self-interest, pursuing highly aggressive tactics that can be regarded as detrimental to domestic companies and their shareholders.
Japan: Reform Opens the Door
Investor activism is no longer confined to the US and UK. Triggered by corporate governance reforms brought in under the late Prime Minister Shinzo Abe and accelerated by later mandates from the Tokyo Stock Exchange, Japanese companies have been forced to elevate capital allocation, expand independent board oversight and protect minority shareholders.
As a result, overseas activist investors have unleashed a significant wave of shareholder activism across Japan. These foreign funds are increasingly pressing cash-rich companies to deploy the capital reserves held on their balance sheets to boost shareholder returns through share buybacks, mergers and acquisitions, and dividend payouts, fundamentally reshaping the country’s corporate landscape.
Where Activism Is Today
Across major markets, rising interest rates, high inflation and depressed economic growth mean the threat of an activist appearing on a company’s share register is higher than it has been in years.
Activists have also become more sophisticated in the campaigns they run, using the media, digital communications and direct engagement with other shareholders to win the argument. This keeps the pressure on the company and how it responds to the charges against it.
There are, however, a number of tactics that companies can deploy to mount a successful defence when an activist comes knocking:
- Engage early. Most successful defences begin before a campaign becomes public.
- Know your register. Understanding supporters, swing holders and opponents is critical, and proactively engaging with key holders could be the difference between winning and losing.
- Have a credible strategy. Companies lose when they cannot explain why the current strategy creates value.
- Win the governance argument. Shareholders increasingly vote on governance as much as financial performance.
- Build third-party support. Media, analysts, proxy advisers and respected investors can materially influence outcomes.
The most successful companies no longer regard activism as an attack to be repelled, but as a test of whether their strategy, governance and shareholder engagement can withstand scrutiny from increasingly sophisticated owners.
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