Many of the biggest activist hedge funds saw blockbuster returns last year as concentrated wagers on companies from fast-food restaurants to real estate paid off.

Bill Ackman’s Pershing Square Holdings Ltd. posted its best performance on record in its publicly traded hedge fund, climbing 58%, while Christopher Hohn’s The Children’s Investment Fund notched its largest gain since 2013. Funds led by Alex Denner, Clifton Robbins and Jonathan Litt surged more than 30%, according to people with knowledge of the matter.

The funds, which typically take stakes in companies and agitate for change, are finding success even as the pace of shareholder activism cools. Activists launched the fewest campaigns last year since 2015, focusing on larger companies.

Activists, which tend to run fairly concentrated portfolios, are benefiting from the soaring markets. The funds gained about 18% last year on average, according to Hedge Fund Research Inc. That’s the best performance for the strategy since 2012 and a turnaround from 2018, when they fell 10%.

“Shareholder activism has become the ‘new normal’ in corporate America,” said Kai Liekefett, partner and chairman of the shareholder activism practice at law firm Sidley Austin LLP. “There is no question that activists will go more and more after mega-cap companies. Most of the small- and mid-cap targets have been picked over by activists in the last decade, so going up is the only way to go.”

At Ackman’s New York-based fund, top contributors to returns included Chipotle Mexican Grill Inc., Hilton Worldwide Holdings Inc., Starbucks Corp., Lowe’s Cos. and Burger King owner Restaurant Brands International Inc. London-based TCI Fund’s 41% gain was helped by investments in companies such as Charter Communications Inc. and Moody’s Corp., which both surged about 70%.

Denner’s Sarissa Capital Management, the US$1.2 billion firm that focuses on health care, soared about 37% in 2019 in its main fund. Performance was driven by an investment in Medicines Co., which reached a deal with Novartis AG that helped push the stock up more than 300% last year.

Robbins’s $2 billion Blue Harbour Group jumped 33% last year, driven by long wagers on Madison Square Garden Co., which approved a plan in November to spin off all of its sports business, and Canadian software company Open Text Corp. The firm, based in Greenwich, Connecticut, also benefited from two midyear buyouts: Genesee & Wyoming Inc., a railroad operator that agreed in July to be acquired by Brookfield Asset Management Inc., and BCA Marketplace Plc, the online used-car seller acquired by TDR Capital.

Litt’s Land & Buildings Investment Management surged about 31% due to wagers on real estate investment trusts such as Liberty Property Trust, which rival Prologis Inc. agreed to buy in October, and QTS Realty Trust Inc. Both rose more than 40% last year.

Here’s a look at how some other activist funds fared in 2019:

• Jana Partners posted a 52% gain, benefiting from a jump in shares of ConAgra Brands Inc., its largest portfolio holding. The firm, run by Barry Rosenstein, said last year that it planned to close two of its flagship funds to focus solely on activist investing.
• Sachem Head Capital Management, which has more than US$3 billion in assets, notched a 22% return. The firm was founded in 2012 by Scott Ferguson, a former partner at Ackman’s Pershing Square.
• Voce Capital Management rose about 12% after launching a successful campaign involving insurer Argo Group International Holdings Ltd. The firm, founded in 2011 by J. Daniel Plants, also won on its passive investments.

Representatives for the firms declined to comment.