This article originally appeared in The Business Times Singapore (subscription required).

ARGUABLY, the single best way to ruin a CEO's day is to report that an activist is on the phone and has just taken a position in the CEO's company. Yet many CEOs know that call will come someday - probably soon.

Data shows that the number of activist-led deals rose an average of 34 per cent a year from 2000 to 2014, and activist investors may now control close to 8 per cent of hedge fund capital. We examined more than 400 of these activist engagements and found that the targets are not only getting larger and more diverse, but they are also extending well beyond the so-called laggards in a given industry. Increasingly, highly profitable companies like Target, McDonald's and even Apple have found themselves in activists' sights. Few, if any, management teams are immune to an activist challenge.

For shareholders, this is largely a good thing. Overall, the track record indicates that activists do, on average, create shareholder value. But our research also shows that a surprisingly large number of activist engagements actually destroy value. Of the 416 companies we studied, 212 improved their performance over a three-year period. But 204 suffered declines in stock performance, and the average swing to the negative was almost as pronounced as the average increase on the upside.

What makes the difference? Our research demonstrates that an investment thesis matters a lot. Outcomes vary significantly, depending on what an activist proposes management does with a company.

While activist engagements have increased, their investment theses generally fall into seven categories. Most activists still lead off with a demand for changes in corporate governance, such as new board members or a new CEO. A minority - those many companies view as agitators - have no publicly stated thesis beyond that. They just want to stir the pot, in the hope that somebody will address what they see as an undervalued stock.

Read the full article in The Business Times Singapore (subscription required).

The writers are partners in Bain & Company. Mr Whitten is from Bain's Dallas office, and Mr Singh from the Singapore office.