James Saft at Reuters wants us to believe that the bigger an activist campaign is, the better it does. His key thesis is the fact that the abnormal returns (i.e. alpha) is 5.8% for activist targets in the 21-day period around when the fund files with the SEC.
In that subset, the largest targeted stocks had an alpha of 11%. The major flaw there is 21-days. Bigger funds can target bigger companies, which get more press; vicious cycle. I’d argue that the micro-cap and small-cap targeted stocks generate outsized alpha when compared to larger stocks over a 36 month period.
Some keys from the research though -
Funds generating the best performance have:
Hold more positions than typical activists
Hold many more board seats
Targeted companies have:
A high number of anti-takeover provisions