Activists going after small-cap companies -- where the majority of campaigns take place -- must take particular note of retail investors who usually represent the vast majority of the voting shares. In 2014, according to statistics from FactSet, 60% of all activist campaigns occurred at companies with a market cap of under $500 million, while 31% occurred at companies with a market cap of more than $1 billion. Only 6.4% of the large cap campaigns occurred at companies valued at more than $10 billion.
Even at large cap companies, where retail investors represent a minority of the stakeholders, they can be important to an activist campaign. Expect Nelson Peltz's Trian Fund Management and its target DuPont (DD) to direct their advisers to reach out to the chemical giant's 600,000 retail investors, as well as 1,400 institutional investors, in a proxy contest that, if it goes forward, would come to a head this spring.
Grant Hughes, executive vice president at Toronto-based proxy solicitor Kingsdale Shareholder Services, notes that in many proxy fights, the stock is widely held and advisers on both sides of a campaign are taking a lot of time pitching their perspective.
"Regardless of the makeup, it's a numbers game and you want to win the vote," Hughes says. "If there are a lot of retail investors in the stock, you have a bigger campaign to run."
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