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James Chadwick, portfolio manager with Ancora Advisors, reflects on proxy battles, political risk, and why industrial America is back in focus.

2025 was unusually volatile — regulatory changes, tariffs, political uncertainty. How did you view the year?



It felt like a very long year. When you look back now, the US Steel proxy fight — which is how the year started for us — feels like it happened in a completely different environment from how the year ended.

There was a lot going on with the new administration coming in, and the government’s stance on that merger changed in ways that I don’t think many people expected. We certainly didn’t. But for us, it was never about trying to block or terminate a merger. We were focused on maximizing shareholder value.

The prior administration had effectively terminated the transaction, and there was uncertainty around timing. The incoming president had also publicly opposed the deal. We believed the company had been poorly managed and that there was a credible plan to create value as an independent U.S. steel company. If the Nippon deal went through, we would benefit as shareholders. If it didn’t, we had a plan. That was always the framework.

What really stood out was how that fight ran directly into the tariff environment. Steel is a protected industry, and suddenly you had uncertainty not just about the company, but about trade policy, geopolitics, even broader trade negotiations. We’d never seen anything quite like it.

It was also the first time we spent meaningful time in Washington outside of the usual proxy advisory context. Dealing directly with political considerations around a proxy contest was new for us — but that’s increasingly the world we’re operating in.



Railroads are another area where politics and regulation have played a role. What other sectors could be impacted by changes in the regulatory or administrative stance in 2026?



One thing that’s been good for us is that we’re not focused on tech. We’re Cleveland-based and have become very much a Rust Belt, industrial-focused investor. While others are doing AI, we’re doing railroads.

With this administration, at least looking into 2026, there’s a strong emphasis on domestic industry — insourcing, U.S. manufacturing, energy independence. I don’t want to call it an industrial revolution, but that broader industrial complex could be very strong.

AI was a big contributor to real GDP growth last year. That will continue, but I think it will moderate. The real driver going forward could be traditional, old-line economy businesses. We’re already seeing a rotation out of non-AI software and into industrial names.



Other hedge fund managers have referenced the narrowness of the market — AI and a handful of tech stocks driving performance while the broader market lagged. Do you think that’s changing?



It could be. The MAG 7 have driven the S&P for years. Seven stocks making up roughly 30% of the index — that creates a real disconnect between the index and the health of the broader economy.

We’ve always thought the equal-weighted S&P is a better indicator of where the market really stands. In the fourth quarter of last year, performance started to broaden. The MAG 7 were still up, but more in line with the overall market.

I’m not saying Nvidia won’t perform, but the idea of these stocks being up 100% year after year isn’t realistic. Meanwhile, sectors like industrials and chemicals — which have been crushed since 2022 — are starting to recover.

Take chemicals. The space has been obliterated, partly due to China and Europe, but those products are essential. When you have real GDP growth, those industries benefit. The market is starting to price that in.



Some argue AI could make passive investing more dominant, making activism one of the few ways to generate differentiated returns. What's your view?



I think that’s right. Activism runs counter to efficient-market theory. The more machine-driven investing becomes, the more opportunity there is in inefficiencies — governance failures, poor capital allocation, mismanagement. Those are hard to quantify and exactly where activists add value.



One striking feature of 2025 was the number of CEOs who exited shortly after activist campaigns. Do you see that continuing?



Yes and no. Historically, activism had a heavy M&A component. M&A has been challenging for a while, so activism has shifted toward operational turnarounds. When that happens, CEOs end up in the crosshairs.

If M&A picks up in 2026 — and people expect a friendlier environment — that could change the dynamic. We’ve seen some encouraging signs, like Norfolk Southern and Sealed Air, but overall deal flow hasn’t meaningfully rebounded yet.

If M&A isn’t an option and the company needs a turnaround, and the CEO has been there a long time, that’s usually where pressure builds.



It's been a challenging environment for proxy advisors. How is that likely to affect how activism is conducted?



It’s still an unknown. Large index funds already have governance teams and don’t rely entirely on proxy advisors.

Most shareholders don’t have the resources to do this themselves and still need proxy advisors. I think ISS and others will remain central to the process.



Do you feel institutions are warming to activism?



Honestly, no. Historically, large pensions funded early activists. Over time, many of those allocators have left the strategy. I haven’t seen a reversal.

Multi-strategy firms like Elliott are different as activism is just one part of what they do. But for traditional activist managers, capital raising remains challenging.



In the US, most board seats were won through settlements in 2025, while in Japan, they were won through proxy fights. Why does the US tend to tilt toward settlements?



Proxy fights are extremely expensive and disruptive. Directors face reputational damage that lasts forever in an online world. Advisors and companies are increasingly comfortable with minority board representation as an alternative.

Change-of-control fights — especially CEO-focused ones — almost always go to a full contest and are very hard to win. If a company can settle and avoid that risk, it’s often better for everyone.

Japan, frankly, seems less willing to compromise but they may be learning that lesson now.





M&A is the big one. If it truly comes back, it would be a boom for activism. Banking activism could also pick up again after a quiet period and sectors that historically had government protection — even tech — may be more exposed than they’ve been in years.



: 2026 YTD (1), 2025 (5), 2024 (3), 2023 (10), 2022 (9)



: 2025 (7), 2024 (3), 2023 (2), 2022 (9)



IN-DEPTH: Ancora on activism, regulation, and the shift back to industrials 

This article originally appeared in our February 26th edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe 

Across board conversations this year, one theme keeps resurfacing: directors are leaning into growth, with deals firmly back on the table — and AI is a major catalyst. Many see today’s environment as a buyer’s market and are positioning to move while conditions create openings — even as their internal systems and processes are still catching up.

AI-fueled M&A tops board agendas for 2026

The appetite is real. M&A and strategic partnerships top the 

 this year, with 40% of directors citing deals as a leading strategy for 2026. 

 as the second-highest capital allocation priority (just behind technology adoption — including AI investments), with directors split evenly between investing in transactions and expanding into new markets. That tight pairing of capital priorities underscores how directors increasingly see AI and broader technology integration as the way to make those deals pay off — by building the data, analytics and automation muscles required to capture post-transaction value.

35% of directors say M&A opportunities are among the most pressing topics for their next board meeting, behind only strategic planning and AI-related risks and opportunities. In a striking asymmetry, just 1% cite the M&A landscape and valuations as a leading risk, while 26% view it as one of their greatest opportunities for 2026. Boards, in other words, are reading the macro environment as a moment to act — not wait.

On paper, directors feel confident. More than half say they have strong transactional/M&A expertise on the board and another 38% report at least some expertise. Yet nearly one in five still list M&A among the most challenging areas to oversee, alongside AI, innovation and capital allocation.

Taken together, the data suggests a familiar pattern: ambition is running ahead of infrastructure. Boards are ready to pursue transformative — often AI-oriented — deals, but many organizations still lack integrated data, standardized playbooks and technology-enabled diligence.

 of 2026, transaction readiness has to become a continuous discipline, not a one-off exercise. In practice, that means pressure-testing whether governance, due diligence and oversight are truly deal-ready at all times — from roles and decision rights to data access and approvals — not just when a transaction is imminent.

 outlines what to have in place across M&A, IPO and other liquidity events.

From transaction readiness to transaction velocity

While there’s great enthusiasm for deals this year, are companies truly ready? Our 

 last fall with Wilson Sonsini and NetSuite surfaced some 

 about M&A, IPO and other transaction readiness:

Only 4% of organizations had fully integrated governance, risk, compliance and finance systems for transactions; roughly 60% were operating on siloed or partially integrated platforms.

56% pointed to limited resources as the chief barrier to deal readiness; 35% cited economic and geopolitical uncertainty and 28% a lack of experienced personnel.

Adoption of core deal-enabling technology was thin: just 20% reported using secure data rooms, 16% ERP tools, 10% specialized financial reporting systems and 5% AI-powered tools for transactions.

The takeaway then was clear: many organizations were still built for analog deals in a digital and AI-fueled market. Fast-forward to today: appetite has rebounded, but the underlying infrastructure hasn’t fully kept pace — especially as AI accelerates dealmaking and raises the bar for diligence, integration and oversight.

Building always-on M&A transaction readiness at the board level

For boards, the mandate is clear: make transaction readiness always-on. Use integrated systems, define clear roles, standardize diligence, stand up robust data rooms and maintain continuous board engagement. The boards that come out ahead in this cycle won’t necessarily be the ones doing more deals — they’ll be the ones pairing bold, AI-informed strategy with the governance, data and integration muscle to execute cleanly.

 to pressure-test your board’s M&A playbook for the year ahead.

M&A is back — and supercharged by AI. Are boards ready to execute? 

This article originally appeared in our February 12th edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe

 produced with our partners at Corporate Board Member, and the signals on risk oversight are impossible to miss. More than 200 corporate directors shared how they see the year ahead; their views reveal where boards are strengthening oversight and where blind spots still linger.

Key risk trends boards can’t ignore in 2026

From a risk oversight perspective, the story starts in a familiar place: the macro environment. A majority of directors cite a sharp downturn in the U.S. economy as the single biggest risk over the next few years, with “black swan” events and large-scale cyber incidents close behind. Economic conditions and government policy shifts top the broader risk landscape too, even as directors see technological disruption and M\&A as some of 

Boards are not standing still. Over the past five years, 84% say they’ve changed their approach to scenario planning, expanding the scope of scenarios they consider, increasing the time devoted to planning and broadening the range of geopolitical, technological and social risks they examine.

Some risk-oversight trends that stood out

 of directors cite a sharp downturn in the U.S. economy as a top organizational risk, and 

 worry most about a black swan event they haven’t yet scenario planned.

 include cyber events or data breaches in crisis exercises, 

 test for technology-related disruption and 

 say more frequent, structured risk discussions at the full-board level would most improve risk oversight, and 

 want a clearer link between risk and strategy.

 point to better use of AI-powered data and technology tools as a key lever to strengthen risk oversight.

 of directors view cybersecurity as a top organizational risk, even though cyber incidents are modeled in crisis planning more than any other scenario.

 say strengthening cyber and data‑privacy defenses is a priority for 2026.

AI and technology‑related regulation is expected to demand the most compliance attention this year, yet 

 of directors say it remains the most underestimated area of compliance oversight.

Upgrading the board’s risk oversight toolkit

Boards still lean most heavily on management reporting and updates from internal audit or the risk committee, but many say that isn’t enough in a world of always-on risk. They point to AI monitoring tools, 

 into strategy discussions, and more frequent engagement with external experts as the upgrades they need most.

Digital infrastructure is improving — nearly half of directors now receive real-time or near-real-time operational data between meetings — but many wish board time were more forward-looking, noting that risk and performance data are often used to monitor the present rather than reframe the future.

What emerges is a picture of boards working hard to catch up with the velocity of risk, but still wrestling with misalignment between what they rehearse, what they prioritize and how they equip themselves. Directors in this year’s survey point to the same set of needs: more structured risk discussions, clearer links between risk and strategy, better tools and analytics and ongoing education on emerging threats.

Risk oversight has to become a continuous discipline, not a periodic exercise. That means pairing richer scenarios and better data with more disciplined boardroom processes, so directors can anticipate disruptions, challenge assumptions and guide management through whatever “unimagined” risks come next.

Diligent

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IN-DEPTH: Ancora on activism, regulation, and the shift back to industrials

M&A is back — and supercharged by AI. Are boards ready to execute?

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