December 23, 2012 6:24 pm
Boom year for
Investment funds that seek to profit by pushing for strategy shifts at
companies or improvements in corporate governance have had a banner
year, posting returns well ahead of the US equity market and their
stock trading peers.
The growing status and firepower for activist investors points to more
boardroom battles ahead for 2013, as big pension funds throw money and
support behind the agitators.
Leading the pack in terms of performance this year are The Children’s
Investment Fund, Corvex and Marcato Capital Management, with returns
of around 25 per cent as of the end of November, according to
For TCI, winning bets included
the media company which decided to
spin out its print
media businesses this year in the wake of the UK phone
Marcato and Corvex both had success at the
of America, where they are attempting to persuade the prison
operator to convert into a real estate investment trust. Pressure from
Corvex also helped push
sell itself to to Conagra last month.
Both hedge funds are run by disciples of more established activists. The
$900m Marcato was started by Mick McGuire after he left Pershing Square, the
$11bn fund run by Bill Ackman. The $6bn Corvex is run by Keith Meister, a
former lieutenant to
corporate raider Carl
Other strong performers include Jana, the $2bn flagship fund run by Barry
Rosenstein is up 21 per cent this year, which has persuaded several
companies to split apart this year, and Cevian, the $7bn European activist
fund up almost 21 per cent at the end of November according to investors.
The small, focused portfolios of activists can be susceptible to periods of
underperformance, and three of the more established firms have trailed this
It has been a mixed year for Relational Investors, run by Ralph Whitworth.
The firm’s small- and mid-cap strategy, with almost $2bn under management,
had returned over 26 per cent this year, according to investors. However the
large-cap strategy, with twice the capital, is up only 6.9 per cent, hit by
declines in the value of computer maker
where Mr Whitworth is on the board.
Bill Ackman’s Pershing Square, was up only 6 per cent at the end of
November, investors said. However, they said it was likely to have had a
strong December as Mr Ackman unveiled a high-profile position betting on a
fall in the share price in Herbalife, the nutritional supplement direct.
Shares in the company fell nearly 38 per cent last week
following Mr Ackman’s
The hedge fund of Trian Partners, run by Nelson Peltz, Edward Garden and
Peter May, was up 4 per cent for the year at the end of November, according
All the firms declined to comment.
© The Financial Times Ltd 2012