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Any bump in a stock price driven by an activist investor evaporates within a year, and even early gains aren’t as robust as they once were

Key Points

Activist investing—where an investor buys up a large amount of a company’s shares and then pushes the company to make changes to its board or operations—is a high-risk and potentially high-reward proposition.

For billionaire investors like Carl Icahn, Bill Ackman and Dan Loeb, it has been especially lucrative over the years, despite some high-profile misses. But should the strategy be one that the average investor follows?

In short: While following an activist campaign can add a temporary boost to your portfolio value, the gains dissipate over the 12 months following the campaign.

To conduct our research, my assistants (Richard Tamirisa and Luigi Bilibio) pulled all activist campaigns against U.S. companies over the past 10 years. To be included in the sample, the activist must have either issued a 13D securities filing (which signals intent of some sort of activist campaign) or acquired a stake of greater than 1% and publicly disclosed an activist campaign against the company.

With this data set, we then looked at a company’s returns in the day before, the day of and the day after an activist announcement and then the one-year returns. For all returns, we looked at excess returns where we subtracted the returns of the S&P 500 to normalize returns for all market conditions.

The first interesting finding is that jumping in early when a campaign is announced used to be more profitable than it is today. For instance, the median excess returns during the three-day window surrounding the announcement of an activist campaign was 0.21 percentage point from 2015 to 2019. That median excess return has dropped to minus 0.06 percentage point from 2020 to 2025.

We see a similar story with average returns, where the average excess return was 0.46 percentage point from 2015 to 2019 but has fallen to 0.34 percentage point from 2020 to 2025.

When we look at the one-year returns, we also find some interesting results: Namely, most of the returns an investor can extract by following an activist campaign come in the first two to three months. The median peak excess returns for an activist campaign occur two months after an announcement, at around 2 percentage points. After month two, excess returns dissipate and go negative by month five.

When we look at average excess returns, we see a similar but amplified dynamic. Average cumulative excess returns following a campaign plateau around month two to month six at 5.3 percentage points, but then dip by month 12.

These differences between average returns and median returns highlight that it is just a few activist campaigns that are driving most of the excess returns. Drilling down into the data, we see that it is the activist campaigns that result in a company sale that drive a lot of the excess returns—as was the case when an activist campaign by Barry Rosenstein’s Jana Partners forced the sale of Vonage Holdings to Ericsson for a 50%-plus gain for the activist.

And investors should know that this strategy of following an activist campaign does come with risks. If an activist campaign fails—for instance, if the sale of a company isn’t achieved—then we note that returns can quickly evaporate or turn negative.

In sum, if you are looking to juice your portfolio returns by following an activist investor campaign, you may be able to achieve some excess returns over the first few months after buying into a campaign. Beyond that brief period, you are subject to significant downside risk if the activist campaign goes belly up.

The marriage has been rockier than anyone expected, at least on the track

Key Points

From the moment Lewis Hamilton strode through the gates at Ferrari’s historic Maranello campus outside Modena, Italy, he became the star of his own Italian opera.

The hero, the greatest driver Formula One has ever known, was living out his childhood dream, having joined Ferrari, and things couldn’t be going better. He posed in front of the house where Enzo Ferrari, the team’s founder, had lived. He pulled on the famous red overalls. And he even chuckled through a few words of Italian. The F1 world couldn’t help but applaud.

Then Hamilton actually squeezed into his race car, and a harsher reality began to set in.

After winning six of his record seven world championships in a Mercedes, adapting to a new team with new terminology, new colleagues and a new teammate in Charles Leclerc was always going to be a challenge. But how quickly Hamilton could make it work instantly became the headline story of the 2025 season.

So far, it’s been rockier than anyone expected. The 40-year-old Hamilton crashed one car during testing in Italy, scraped into 10th place at the first Grand Prix of the season in Australia, and found himself stripped of a result in the second race in China when both Ferraris in the race were disqualified for technical violations. Through five races, he has only cracked the top six once and has yet to reach the podium.

“Hopefully we won’t do that again as I continue to learn this car,” Hamilton said after his disqualification in Shanghai. “Obviously we’re losing ground to the McLarens points-wise…but we’ve just got to keep pushing.” McLaren is currently first in the F1 team standings.

A risky move

What makes every episode of this saga so compelling is that Hamilton signing for Ferrari was a surefire success off the track, and a risky bet on it.

In addition to holding nearly every major record in Formula One and being the sport’s first and only Black driver, Hamilton is also a style icon and globe-trotting A-lister. His personal brand merging with the heritage, glamour and sex appeal of Ferrari was always going to be a winner. (Hamilton’s first photos in front of Enzo Ferrari’s house turning into the most popular Instagram posts in F1 history confirmed that much.)

When it came to the business of actually winning races, however, things weren’t so clear-cut. In Formula One, the 10 teams spend a 24-race season competing on two fronts at once. The drivers, two per squad, rack up points for their teams in the Constructors’ Championship and for themselves as individuals in the drivers’ standings. Ferrari hasn’t claimed either title since 2008.

Not only that, but Ferrari has spent the past six years invested in turning Leclerc, a talented 27-year-old from Monaco, into a world champion. He’s the one the Italian media dubbed Il Predestinato, the chosen one. Only now the team has dropped the F1 GOAT squarely into the Ferrari garage he once ruled, and Leclerc has to play it cool. “Ferrari is my life,” he told reporters over the offseason. “It will be a nice duel with Hamilton.”

Ferrari insists that there is no hierarchy between its drivers—its army of scarlet-clad engineers and mechanics will do everything to help both men win. But in this odd dynamic, Leclerc and Hamilton are both teammates and rivals, driving nearly identical machines, with finely honed instincts to elbow each other for every millisecond on the road. It’s up to Ferrari team principal Frédéric Vasseur to referee the fight and remind Hamilton and Leclerc that they aren’t just competing for themselves—they’re racing for the Prancing Horse painted on their cars.

“At no time can that battle between them cost the team a single point,” Vasseur says. “At the same time, I don’t want to put on the brakes, because that’s where the performance comes from.”

F1 heritage

Vasseur knows just how high the stakes are for Ferrari, which occupies a singular place in the sport. The Scuderia, as it’s also known, is the only team to compete in every single season since the series began in 1950. As the sport’s former boss Bernie Ecclestone used to put it, “Ferrari is Formula One and Formula One is Ferrari.”

Still, should Vasseur fail to win a Constructors’ Championship, the team’s dry spell would reach 17 years, the longest since Enzo first entered one of his cars in a Grand Prix.

Standing in his way is an ascendant McLaren team that narrowly beat Ferrari for the 2024 title, a quickly improving Mercedes team, and as always, Red Bull, whose lead driver Max Verstappen has won the past four drivers’ crowns. And with its calamitous start to the season, the Scuderia has spotted all of them a head start. Five races in and going into Miami, Ferrari sits in fourth place.

Hamilton is confident that a turnaround is coming soon—after all, the season lasts until December. In the longer term, he is betting that Ferrari will be back among the leaders when wholesale regulation changes come into effect next year, radically altering the technical specifications of the sport.

Meanwhile, Hamilton will continue to draw the spotlight for the late-career move that rocked F1—whether he starts winning or not. And if there’s one driver who has proven he can cope with the burning levels of attention that come with being a seven-time world champion racing for the sport’s most storied, most neurotic team, it’s him.

“He’s one of the only drivers who really knows how to compartmentalize his life,” Vasseur says. “He can spend one day doing marketing, the next day doing fashion, and the third discussing his front left tire with an engineer.”

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After negotiations, companies paying Trump’s car tariffs won’t also be charged for other levies

Key Points

WASHINGTON—President Trump is expected to soften the impact of his automotive tariffs, preventing duties on foreign-made cars from stacking on top of other tariffs he has imposed and easing some levies on foreign parts used to manufacture cars in the U.S., according to people familiar with the matter.

The decision will mean that automakers paying Trump’s automotive tariffs won’t also be charged for other duties, such as those on steel and aluminum, according to people familiar with the policy. The move would be retroactive, the people said, meaning that automakers could be reimbursed for such tariffs already paid. The 25% tariff on finished foreign-made cars went into effect early this month.

The administration will also modify its tariffs on foreign auto parts—slated to be 25% and effective May 3—allowing automakers to be reimbursed for those tariffs up to an amount equal to 3.75% of the value of a U.S.-made car for one year. The reimbursement would fall to 2.5% of the car’s value in a second year, and then be phased out altogether.

Trump is expected to take the actions ahead of a trip to Michigan for a rally outside Detroit on Tuesday evening, marking 100 days since he took office.

Automakers, who have been in near daily communications with the administration, secured some relief while Trump obtained commitments to further his domestic manufacturing goals, the people said.

“President Trump is building an important partnership with both the domestic automakers and our great American workers,” Commerce Secretary Howard Lutnick said. “This deal will be a major victory for the president’s trade policy by rewarding companies who are already manufacturing domestically, while providing a runway to manufacturers who have expressed their commitment in investing in America and expanding domestic manufacturing.”

The steps are meant to provide automakers time to move supply chains for parts back to the U.S., and would likely be a significant boost to automakers in the short term, said one person familiar with the plan. Automakers would have to apply to the government for reimbursements, and it wasn’t immediately clear where those funds would come from.

“Ford welcomes and appreciates these decisions by President Trump, which will help mitigate the impact of tariffs on automakers, suppliers and consumers,” Ford Chief Executive Jim Farley said in a statement. “We will continue to work closely with the administration in support of the president’s vision for a healthy and growing auto industry in America. Ford sees policies that encourage exports and ensure affordable supply chains to promote more domestic growth as essential.’’

Mary Barra, chair and chief executive officer of General Motors, said: “We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together.”

Analysts predicted higher prices for cars as a result of Trump’s auto tariffs. Morgan Stanley estimated the 25% tariff could increase the average cost of a car by $6,000, which would translate into a 10%-to-12% price hike.

Ahead of announcing new tariffs earlier this month, Trump warned top automakers against raising prices. Automakers and industry suppliers have said bringing back their factories to the U.S.—the goal of Trump’s tariff plan—could take years.

Softening the impact of auto tariffs is the latest rollback of elements of the president’s trade policies, following market upheaval and intense lobbying by companies and countries.

Trump imposed a 90-day pause earlier this month on many of the tariffs he had put in place just days earlier. He also recently softened his tone on China after ratcheting up tariffs on imports from the country to 145%.