IN-DEPTH: Ancora on activism, regulation, and the shift back to industrials
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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.
What areas will you be watching in 2026?
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.
Ancora by the numbers:
Number of campaigns: 2026 YTD (1), 2025 (5), 2024 (3), 2023 (10), 2022 (9)
Number of board seats won: 2025 (7), 2024 (3), 2023 (2), 2022 (9)
