IN-DEPTH: Activists look to buybacks as spending soars
This article first appeared on Diligent Market Intelligence's Activism newswire. To register for a demonstration and trial of the product, click here.
Amid a record year for share repurchases when measured in dollar terms, activists have been vying for a piece of the pie.
By the beginning of December, U.S.-based companies had faced 26 share-repurchase demands from activists since the start of the year, Diligent Market Intelligence (DMI) data show.
U.S. companies had repurchased an unprecedented $1 trillion worth of stock as of August 20, according to analysts at Birinyi Associates, who projected that the buybacks market was on track to hit $1.3 trillion by the end of the year.
And while the buyback wave has been to a large degree driven by big banks and technology companies, according to Derek Horstmeyer, professor of finance at George Mason University's School of Business, activists have also been leaning on the mechanism as a means to pressure boards.
Keeping valuation levels up
Companies have been rolling out buybacks as they strive “to keep valuation levels up” for shareholders, Horstmeyer explained.
In 11 of the 26 cases examined by DMI, activists had success in persuading companies to carry out buybacks. Saba Capital Management was among those to find victory, winning buybacks commitments at three closed-end funds.
Engine Capital also notched a victory at Lyft, which agreed to expand its repurchase program to $750 million. The hedge fund had argued that Lyft’s depressed share price, strong balance sheet, and cash generation made a buyback a compelling way to unlock value. Founder Arnaud Ajdler ended his campaign in May, praising the board’s willingness to engage.
Keros Therapeutics also bowed to pressure on capital allocation announcing a $17.75-per-share repurchase of stakes held by ADAR1 and Pontifax some four months after ADAR1 failed in its bid to unseat two incumbents at the company’s June annual meeting.
Swapping buybacks for the boardroom
Not every company gave in to activist pressure on buybacks. In several cases, proponents withdrew their demands after securing influence elsewhere, most notably in the boardroom. Five campaigns ended this way, with settlements that traded repurchase pressure for board seats or governance concessions.
At Autodesk, Starboard Value nixed its buybacks demand as part of a settlement that saw the software provider add Oracle finance chief Jeff Epstein and former Deloitte Senior Partner Christie Simons to the board.
Jana Partners was another to pull a buyback demand as it settled with frozen food company Lamb Weston, which revamped and expanded its board in June with six new appointees, among them Jana’s Scott Ostfeld. The activist, which disclosed a 5% stake last October, had initially pressed the company on “share repurchase strategy and execution” following what it called a series of “self-inflicted missteps” that hurt shareholder returns.
Governance backlash
Capital return is poised to remain a central theme for activists into 2026 with a recent report by Goldman Sachs revealing that companies in the Russell 3000 repurchased a record $648 billion in the first half of 2025.
“Continued earnings growth, rate cuts, and declining policy uncertainty suggest share repurchases should continue to grow in 2026,” wrote David Kostin, Goldman’s chief U.S. equity strategist, in a post on LinkedIn.
But the boom is drawing some scrutiny from other stakeholders as the year ends, with some shareholder advocates warning that buybacks can distort financial metrics and inflate executive pay. At Palo Alto Networks’ December 9 annual meeting, the Vermont Pension Investment Commission advanced a novel proposal to strip buyback effects from the formulas that determine senior executive incentives. The cybersecurity company made the case that such a change would tie its hands on compensation design and restrict tools needed to align pay with long-term shareholder interests. Despite the core argument that senior executive pay should be aligned with operational results and the individual contributions of senior executives, not financial engineering, the proponent won just 3% support for its resolution.
