(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Sebastian Pellejero
NEW YORK, Feb 17 (Reuters Breakingviews) - Corporate America is too cozy with insurgents. A record 52 companies cut deals in 2025 alone to let the likes of pushy hedge fund operators Elliott Management and Jana Partners occupy their boardrooms, among other concessions. Over a broader span, everyone from AT&amp;T (T.N) to Salesforce (CRM.N) has come to the conclusion that peace is safer than war. The longer-run record suggests that the decision comes at a price.
Détente holds obvious appeal, as the Barclays tally of agreements indicates. Not only does it avoid a potentially damaging public battle, but activist investors have generated 12% annualized returns, net of fees, since 2022, outpacing the industry average by more than 2 percentage points, according to data cruncher HFR. This would seem to imply that they know how to add value for other shareholders, too, and thus are worth inviting inside.
The wider lens tells a weaker story, however. Over the past decade, annual net returns were closer to 6%, lagging the performance of peers that try to exploit M&amp;A-related price swings and the broader hedge-fund universe. Chief executives are nevertheless under pressure. Activist investors won roughly three-quarters of the U.S. board seats they sought in contested battles last year, near the top of the historical range. Moreover, 32 CEOs departed within 12 months of having their cages rattled. Changes to election processes are also bringing new challenges. JPMorgan’s asset management arm and proxy advisers such as Glass Lewis will be assessing more votes in-house, making resistance an even costlier option. The upshot is that while assertive hedge funds excel at creating urgency, they struggle to provide durable benefits. When someone like Bill Ackman or Dan Loeb comes knocking, the jolt turns a governance quarrel into a tradable event. After the truce comes a hard truth. Over the subsequent three years, companies that extended olive branches to activist investors, in aggregate, underperformed the S&amp;P 500 Index (.SPX) by 7%, a fresh study of 634 U.S. settlements between 2010 and 2024 found.
The median outcome is mildly better, at a shortfall of about 5%, meaning that most agreements at least do not end in disaster. They simply fail to help much either. It does beg the question as to why it’s the reflexive response from an underperforming company confronted with a credible activist threat, if the result is merely damage control rather than value creation.
It’s sometimes hard to keep accurate score, too. Management teams are rarely idle when an investor raises its voice; many CEOs are already cutting costs, selling assets or preparing a reset. At the same time, an uptick in the stock price does not necessarily prove the underlying problems have been solved.
At Salesforce, for example, Elliott and ValueAct Capital pressed for discipline in early 2023, just as boss Marc Benioff was already trying to shrink expenses. The software developer soon rolled out a new strategy, added three independent directors and granted ValueAct, co-led by Mason Morfit and Rob Hale, a board seat. By August of that year, the shares were up more than 40%. The artificial intelligence market freakout has pushed them back below their pre-settlement price, blurring the investor’s impact.
Similarly, Walt Disney (DIS.N) already had pledged $5.5 billion in savings and 7,000 job reductions before Nelson Peltz’s Trian Partners demanded entry to the Magic Kingdom’s inner sanctum in 2023. Boss Bob Iger refused to cave, spending about $40 million to defeat Peltz in a proxy battle. The company’s shareholders, meanwhile, have lost more than 40% over five years. What activists reliably add to the equation is impatience. There’s dependable evidence from pressing boards to seek new ownership. Companies that found a buyer within three years of settling with a mouthy hedge fund beat the market by more than 15%. Forcing a sale delivers a quick control premium and lets a CEO claim vindication. It also suggests that investors with a reasonable case for selling provide a far more consistent edge than ones claiming to bring a better business playbook.
This reality is gaining traction. Deal-driven campaigns in North America more than doubled from the first half of 2025 to the second, with nearly two-thirds of fights late last year hinging on a breakup or strategic review, according to research from investment bank Lazard. With M&amp;A activity hot, advisers also expect more funds to push companies to pursue transactions, Reuters reported last month.
Recent clashes underscore the shift. Elliott, for example, wants Phillips 66 (PSX.N) to simplify its portfolio as consolidation reshapes the oil refining industry. Jeff Smith’s Starboard Value urged Kenvue (KVUE.N) to review its brands barely a year after Johnson &amp; Johnson (JNJ.N) spun it off. Cybersecurity provider Rapid7 (RPD.O) was encouraged by Jana Partners to explore a sale as growth slowed. Dan Loeb’s Third Point ended a three-year activism drought last month by pushing real estate data guru CoStar (CSGP.O) to sell its Homes.com portal.
In the short run, testing the market price masquerades as prudence. Over a more representative time span, it boils down to restlessness, crystallizing smaller gains than might otherwise accrue through years of painstaking work. When the surest path to value runs through an auction, boards can find a way to concede.
The problem is that kneejerk capitulation for any reason simply to avoid friction will only frustrate patient capital. As with most unexpected guests, they leave messes behind for someone else to clean up. Follow Sebastian Pellejero on LinkedIn.
<h3>CONTEXT NEWS</h3>
Activist investors are planning to push more companies to sell or break up in 2026 as deal activity heats up and opens a faster and more profitable way to realize gains, Reuters reported on January 20.
Activist hedge funds mostly underperform peers
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Global activist campaigns hit a record high last year
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/BRV-BRV/myvmqdaekvr/chart.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="1420" height="1046" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/BRV-BRV/myvmqdaekvr/chart.png"/>
Even prolific activists generate inconsistent results
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M&amp;A is the most popular activist demand since 2021
<img src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/BRV-BRV/lgvdqroydpo/chart.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" width="1420" height="928" original-src="https://imageproxy.pbkrs.com/https://www.reuters.com/graphics/BRV-BRV/lgvdqroydpo/chart.png"/>
(Editing by Jeffrey Goldfarb; Production by Shrabani Chakraborty)

UPRO

Corporate America is increasingly accommodating activist investors, with a record 52 companies making concessions in 2025. While activist investors have shown strong short-term returns, their long-term impact is less favorable, with companies that engage them underperforming the S&P 500 by 7% over three years. The trend reflects a shift towards deal-driven campaigns, as activists push for strategic reviews and mergers, indicating a growing impatience for immediate results rather than sustainable value creation.

- Corporate America has increasingly accepted activist investors, with a record 52 companies making deals in 2025 to involve hedge fund operators.  
- While activist investors have outperformed the industry average recently, over a decade, companies that engaged with them often underperformed the S&P 500 by 7%.  
- The trend shows that while short-term gains may be evident, the long-term benefits of welcoming such investors seem limited, raising concerns about the sustainability of this approach.

BREAKINGVIEWS-Fewer pushy investors deserve olive branches