Under the Radar: Value Is Rising from the Ashes of Market Turmoil

It is messy.

One tweet sends stock prices plummeting lower.

Another revives the hopes and dreams of beleaguered traders, and they go into a buying frenzy.

Scott Bessent gives a closed-door talk that is on the wires with a word-for-word replay almost instantly and the market rebounds.

Peter Navarro escapes from the broom closet Elon Musk shoved him into and prices collapse once again.

Most market participants are not big fans of messy markets.

Corporate executives hate the lack of clarity and cloud of uncertainty that make it impossible to fit the future into a spreadsheet.

Trading algorithms develop hiccups.

The massive increase in career risk freezes mutual funds and endowment managers in place.

Holding cash and sprinting down the halls at 50 Hudson Yards screaming “Prudent Man, Prudent Man” just might preserve that cushy job and allow the mortgage and private Pre-K tuition bills to be paid again next month.

Buying shares of a beaten-up tech stock just before an announcement of new tariffs on semiconductors could lead to a third-floor walkup on Clinton Street and Wallace Elementary School.

Mediocre performance for inaction is a much better deal than training for the Metro North to the Midtown ferry.

There is, however, one group that thrives in messy.

Activist investors, those now-gentlemanly investors that were known in days of old as corporate raiders and takeover artists, love messy.

Messy creates distortion and distortion creates opportunity.

Activists have been embracing the mess so far in 2025.

The Shareholders Advisory Group at Barclays just released its first quarter look at activism and it’s pretty clear that activists like what they see.

Despite economic storm clouds gathering on the horizon and unpredictable market volatility, the activists aren’t just staying in the game. They are doubling down.

Barclays’ data shows that global campaign activity has roared ahead with 70 campaigns in Q1, jumping 17% year-over-year. More tellingly, that’s running 25% above the four-year quarterly average.

Particularly noteworthy for value-oriented investors: companies under $5 billion market cap are being targeted at an accelerated rate, representing 66% of campaigns in Q1. This tells me that activists are finding more inefficiencies and potential value in the small and mid-cap space.

Of course this is exactly where traditional value investors should be looking anyway.

An interesting small activist holding is in the portfolio of ValueAct Holdings out of San Francisco.

Over the past 25 years the firm has built up a strong track record of wins and winning board seats at target companies.

The firm has had big winners with tech companies like Microsoft MSFT, Adobe ADBE and Salesforce CRM.

The firm currently owns over 4 million shares, or a little over 12% of Insight Enterprises NSIT. It currently has one board seat at the Information Technology company.

Insight Enterprises is a Fortune 500 global technology company founded in 1988 by brothers Tim and Eric Crown as Hard Drives International, initially selling computer storage products. The company later changed its name to Insight Enterprises in 1991, went public in 1995, and has since evolved into a comprehensive IT solutions provider with offices in 19 countries.

The business should see strong tailwinds from major trends including big data, AI, cloud computing and cyber security.

The stock has had a strong run during the time ValueAct has been involved but has had a pretty sharp decline since the start of Tariff Wars 2025 edition.

Many of Insight’s customers are governments and government agencies or in industries including healthcare and education that are seeing negative impacts from the administration policies.

The stock is currently 20% of ValueAct’s portfolio and at some point it may make sense for them to gently suggest that Insight look for a potential offer from a larger IT firm.

This could unlock some of the value of the company and give the activist an exit strategy.

Barington Capital Group is a small but scrappy activist investment firm headquartered in New York City. Founded in 2000 by James A. Mitarotonda, a former investment banker turned shareholder gadfly, Barington has built a reputation as a focused value-oriented investor that targets underperforming small- and mid-cap companies, usually with a consumer or industrial tilt.

Barington is not in the business of financial engineering or short-term flips. They’re more like value investors with an activist toolkit that is focused on long-term turnaround stories where unlocking operational or strategic inefficiencies can create a meaningful rerating.

Its current target is Matthews International MATW.

Matthews has a puzzling combination of businesses that include factory automation and tombstones, caskets, and cremation equipment.

It sold its packaging and branding business for $50 million earlier this year as the proxy fight heated up.

Barington lost the first round as the company was able to hold off the activist’s attempt to gain three board seats.

The company is potentially worth at least twice the current stock price, so I doubt Barington slinks away in defeat.

Like Arnold and MacArthur, they will be back.

There will be more volatility and general messiness.

It will create opportunity for activists and those who track the activists.