(HedgeCo.Net)  Activist hedge funds are staging a notable comeback in 2025, leveraging market volatility and valuation disparities to push for strategic change at public companies.

After several subdued years, activists are once again targeting underperforming firms with clear catalysts, including asset sales, spin-offs, governance reforms, and capital return programs. Lower equity valuations have strengthened activists’ arguments that companies are misallocating capital or failing to unlock shareholder value.

Boards have become more receptive. Facing pressure from shareholders and heightened accountability, many companies are choosing engagement over confrontation. This shift has led to negotiated settlements rather than prolonged proxy battles.

Modern activism has evolved beyond financial engineering. Many hedge funds now emphasize operational improvements, digital transformation, and long-term strategy. ESG considerations also play a growing role, as activists push for sustainability measures tied to shareholder value.

Performance has followed. Activist strategies have delivered solid returns in 2025, benefiting from event-driven catalysts largely uncorrelated with broader market moves. This diversification appeal has drawn renewed investor interest.

Critics warn that activism can encourage short-termism. However, supporters argue that disciplined engagement improves corporate efficiency and accountability, particularly when management teams resist necessary change.

As market uncertainty persists, activists are expected to remain selective but influential, focusing on high-conviction campaigns where governance reforms and strategic shifts can unlock meaningful value.