2023 played host to a number of first-time activists, with new investment firms, current directors and former CEOs adopting the strategy to enhance shareholder value creation.

In 2023, as of August 23, 249 first-time activists made public demands globally, compared to 362 and 387 activists throughout 2021 and 2022, respectively. Of the 569 demands made so far this year, 20% were at least partially successful, with 42.2% unsuccessful.

Here, Diligent Market Intelligence (DMI) examines some of the newcomer activists of the season and how their engagements have shaped up.

MKT Capital

$61-million hedge fund MKT Capital made a name for itself when it kicked off a withhold campaign at Canadian biotech Aurinia, citing its “egregious” compensation practices. The first-time activist argued that the company’s CEO, chair and compensation committee chair “should be held accountable for perpetuating a culture of self-enrichment at the expense of Aurinia shareholders.”

According to Diligent Market Intelligence’s (DMI) Compensation module, CEO Peter Greenleaf’s 2022 total granted compensation was $8.8 million, compared to a global industry average of $7.1 million.

MKT called on the board to commit to a strategic review process, adding that a sale to a “well-capitalized acquirer” could yield up to $28 per share, which would represent a 158% premium on Aurinia’s share price of $10.87 at the time of the campaign kick-off on April 24.

Despite both Institutional Shareholder Services (ISS) and Glass Lewis siding with management, Chairman George Milne and compensation committee Chair Joseph Hagan resigned from the board after failing to receive majority support at the May annual meeting. This development prompted a strategic review, and, in August, the biotechnology company appointed two new directors and announced it would be exploring a sale.

So far this year, MKT’s average follower return on all investments is negative 16.9%.

Vesa Equity Investments

Luxembourg-based Vesa Equity Investments, a $310-million hedge fund owned by Daniel Kretínský and Patrik Tkác, was founded in 2018 but took its first foray into activism this July, urging French grocer Casino Guichard-Perrachon to turn down billionaire Xavier Niel’s 900-million-euro ($962-million) offer to rescue the debt-laden supermarket group.

Vesa Equity offered up a rival bid, consisting of a 1.35-billion-euro ($1.4 billion) equity injection, made up of 290 million euros coming from secured creditors in equity investments and 200 million euros through a rights offering. The deal also won the backing of Farallon Capital Management and Davidson Kempner Capital Management.

Later that month, Casino revealed it had reached an agreement in principle with Vesa Equity, in a deal that would result in the hedge fund owning between 50.3% and 53% of Casino’s share capital.

Taking all investments in its portfolio into consideration, Vesa Equity recorded an average follow returns of 155.4% in the period.

William Coulter and Mark Tkach

William Coulter and Mark Tkach sold their business, RideNow PowerSports, to RumbleOn in 2021, in exchange for a combined 32.5% of RumbleOn Class B shares and seats on the board. However, by 2023, both entrepreneurs were unhappy with the direction the company was taking and decided intervention was needed.

In a March open letter, the duo launched a contest for five board seats, alleging that “executives and directors purposely avoided seeking our counsel or disregarded it outright. Instead, they appear to entrench themselves further, ignoring the economic value that has been destroyed along the way.”

RumbleOn’s decision to add dissident nominee Steven Pully to its board in May was not enough to appease the entrepreneurs, who took aim at nominating committee Chair Adam Alexander for failing to ensure the board was sufficiently independent.

On July 4, RumbleOn struck a deal with Tkach and Coulter, in which it agreed to make Tkach interim CEO, elect Coulter as a director at its annual meeting and pay the two $2.5 million to cover their proxy expenses. Shortly after, Stone House Capital Management also secured a seat on the board.

Both Coulter and Tkach’s average follower returns for all investments stand at negative 83.3%.

Peter Derycz

Amid share price woes and rising costs, Research Solutions’ former CEO Peter Derycz, together with activist Bristol Capital Advisors, took its first foray into activism in August, nominating six directors to the U.S. software company’s board.

In an open letter, the duo, controlling a roughly 20% stake, criticized the company for the high turnover rate of its senior management, “bloat[ed]” selling, general and administrative (SG&A) expenses and declining share value, claiming “maintaining the status quo is no longer tenable and change is needed immediately to right the ship.”

The campaign was not without opposition, with Cove Street Capital describing the contest as a “massive waste of time and corporate money,” while Artko Capital labeled it as “bitter and unhelpful.”

In early September, Research Solutions revealed it would appoint former Goldman Sachs analyst Jeremy Murphy to its board, shortly after the resignation of director and former Cove Street Portfolio Manager Eugene Robin.

But the campaign came to an end on September 18 as both sides reached a cooperation agreement under which the two shareholders withdrew their nominations in return for their choice of a new independent director for the company.

Derycz’s average follower return is 103.6%.

Prime Movers Lab

Occasional activist Prime Movers Lab took its first foray into activism in 2023, making demands of U.S. utilities and industrials companies Heliogen and Momentus.

In February, the $1.2-billion fund manager criticized Heliogen’s decision to replace its former CEO, Bill Gross, with its then-Chief Financial Officer Christiana Obaiya. In a filing, the 9% stakeholder said the decision left Prime Movers “surprised and deeply disappointed,” as Obaiya did not have prior CEO experience.

Shortly after hinting that the fund manager may push for enhanced shareholder representation on the board, Continuum Renewables made a $78-million takeover offer for the company, which was rejected by Heliogen’s board.

The company’s share price is down 94.8% over the past year and was unlisted from the S&P Global BMI index earlier this month.

Prime Movers also took aim at Momentus this year, calling for the appointment of its partner Dakin Sloss to the board, alongside enhanced disclosure of its capital expenditures.

Prime Movers’ total average follower return for all of its portfolio is negative 94.6%.