ANALYSIS: Q3 Activism Solidifies 2023’s Record-Breaking Path

It’s been a busy quarter—and a busy year—for activists.

Activist investors launched 147 campaigns in Q3, the highest count for a third quarter since Bloomberg began tracking global investor activism in 2017.

Q3’s record campaign counts—stacked on top of a bustling Q1 and Q2—are setting 2023 on course for having the highest year-end totals in at least six years.

Micro-caps Make Big Difference

What’s responsible for the bustling Q3? A contributing factor may be activists targeting micro-cap companies (companies with a market capitalization of less than $300M).

The number of campaigns launched against micro-cap companies has increased over the past six Q3s, with two standout Q3s. In Q3 2019, activists launched 70 micro-cap campaigns jumping from 44 in 2018. This year, the campaigns had a smaller—but still substantial—jump from 78 in Q3 2022 to 91 in Q3 2023.

And while the growth in micro-cap activism isn’t unique to Q3s, it may be what is pushing Q3 campaign counts above historical numbers. It was suggested by practitioners that small companies may be increasingly vulnerable to activist efforts in the age of the universal proxy. Could these campaign counts be a harbinger? Perhaps, but it’s too soon to tell.

Proxy Fights Pack a Punch

Not only are Q3 campaigns increasing in overall count since 2020, but those campaigns are also coming with higher stakes: Activists launched 21 campaigns that leveraged proxy fights in Q3.

While Q1 is typically the busiest time for proxy fights, as activists rush to meet fast approaching deadlines to appear on most company ballots, this strong Q3 activity may signal that the risk to a company is a year-round risk.

Q3 2019 also included 21 campaigns that eventually spurred proxy fights, but those campaigns have had years to launch a fight, whereas Q3 2023 campaigns have had mere months or even days. Q3 2023’s proxy fight totals are likely to well surpass 2019’s counts as those campaigns mature.

Teed Up for 2023 to Break Launch Record

Global activists launched 567 campaigns from Q1 to Q3 2023, with each quarter breaking the previously set campaign launch totals Bloomberg has on record.

In the past six years, the lowest number of Q4 activism campaigns was 123 (Q4 2017). If activists meet that number of campaigns, the yearly total would still be higher than any of the past six years.

But based on the campaign launches for the first three quarters, activists are well-positioned to not just meet that number, but to exceed it.

Bloomberg Law subscribers can find related content on our ESG Practice page, as well as our Practical Guidance: Shareholders and Practical Guidance: Proxy Regulation pages. Data accessible at BI ACT <GO>.

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