Predators Are Good for Stocks

Companies targeted by activists outperform the market
Photograph by Juniors Bildarchiv GMBH/Alamy

Carl Icahn, Bill Ackman, Nelson Peltz, and other activist investors are turning out to be a shareholder’s best friends. Stocks of companies targeted by activists from 2009 through 2013 gained 48 percent on average as of the end of last year, according to data compiled by Bloomberg. That beat the Standard & Poor’s 500-stock index by about 17 percentage points. “Some people argue that the activist hedge funds benefit at the expense of the other shareholders, but that doesn’t happen,” says Wei Jiang, a Columbia Business School professor whose own study reached similar conclusions. “It’s not like they pump and dump and the rest of the shareholders suffer.”

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