With outsized market returns of nearly 20% delivered by the S&P/ TSX Composite Index year-to-date in 2024, we will be on the lookout to see whether stronger markets this year will yield fewer campaigns next year.
STEADY AIM: ACTIVISTS CONTINUE TO FOCUS ON LARGE-CAP COMPANIES
According to the TMX Current Market Statistics, roughly 12% of issuers listed on the Toronto Stock Exchange and TSX Venture Exchange (excluding exchange-traded products and close-ended funds) have a market capitalization exceeding C$1 billion. Yet, these companies continue to be disproportionately targeted by activists. In 2024, large-cap companies represented 22% of all companies subject to public demands. Figure 1 illustrates the historical number of large-cap and total issuers subject to shareholder demands. Activist activity targeting large-cap companies continues to be driven by U.S.-based shareholders. Since the beginning of 2022, U.S.-based activists seeking change at Canadian-listed companies were responsible for almost half of all activist demands directed at these larger issuers. This may be explained in part by the fact that U.S.-based professional activists are more likely to target large issuers because their market capitalizations afford activists room to build a meaningful stake without moving the market. Figure 2 illustrates the continuing presence of U.S. activists in Canada.
Figure 2: Breakdown of Activist Jurisdiction (2017 – 2024/11/30)
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
7%
8%
9%
11%
12%
14%
14%
19%
26%
17%
35%
43%
33%
46%
49%
48%
69%
65%
57%
53%
50%
42%
40%
33%
2017
2018
2019
2020
2021
2022
2023
2024-11-30
Canada
United States
Other
3
Governance Insights 2024
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