What happens when activist investors stop sitting on the sidelines? Corporate boardrooms are about to find out. With economic conditions toughening and spending pulling back, advocates have turned up the pressure on American corporations — with potentially billions on the line.

Activate activism: After a busy 2022 and 2023, activist investors are waging war against businesses in record volumes, aiming to win board seats, influence, and the ability to execute new strategies at struggling firms. According to Barclays, a record 147 campaigns were kickstarted in the first half of 2024, putting it on track to be the busiest year for shareholder activism ever. Activist funds have also taken on larger organizations, turning once-boring boardroom beef into headline news.

• Starboard, Elliott Management, and Carl Icahn have led the charge, pledging billions to take on entities like Crown CastleCCI
  , JetBlueJBLU
  , and AutodeskADSK
  .
• Proxy battles have become higher-stakes and more expensive, with Nelson Peltz spending over $70M in a record-setting but unsuccessful bid against DisneyDIS
  .

Is Activism Fixing Corporate America?

Activist efforts have successfully replaced CEOs, changed strategies, and cut costs. Despite weaker results, larger activist institutions have won some victories. For example, Elliott Management’s campaign against StarbucksSBUX

resulted in a CEO change, while its stake in SouthwestLUV

has pushed the airline to reconsider its strategy and operations. However, not all campaigns have been equally successful.

• According to Hedge Fund Research, shareholder campaigns have generated flat returns so far this year, compared with 18% last year (Reuters).
• Campaigners have also been less successful in winning board seats — with only 11% of activists securing seats in proxy battles this year, down from 65% last year.

Activist problems: As campaigns get larger and more expensive, the impact of corporate advocacy has become a recurring topic on Wall Street. Although this year’s activist stakes have created short-term value, it will take more time to see if they produce long-term results for shareholders. Often, they don’t — one McKinsey study found that most undertakings don’t create lasting value for companies. Maybe it’s just another indicator that you can’t always fix what’s broken.