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Activist Investors Will Get Less Active in 2016

The staff of Fortune recently assembled its predictions for 2016. Here’s one of our forecasts.

The loudest hedge funds on Wall Street could go quiet in 2016. The reason: A less-friendly bond market. Two common moves shareholder activists push for are break-ups and share buybacks, even if companies have to borrow to do it.

Neither move is generally liked by bond holders, but for a while that didn’t seem to matter. Recently, though, bond investors have gotten more credit sensitive. That could make some of the activists moves too costly. On top of that, the Internal Revenue Service has indicated that it may crack down on tax-free spin-offs that separate assets but not operations, like the spin-offs that activist hedge fund Starboard Value has pushed Yahoo (YHOO) to pursue (including Yahoo Japan and licenses to its intellectual property), or like Jana Partners’ efforts to get Macy’s (M) to separate its real estate.

Activist managers still have over $100 billion in their funds. Expect them to go after bigger companies that have more ability to borrow, and focus on strategic changes. Most likely activist targets in 2016: Lumbering corporate giants, including General Electric (GM), of which activist Nelson Peltz already has taken a 3% share; IBM (IBM); and General Motors (GM).

This article is part of the 2016 Fortune Crystal Ball, a package of 33 predictions about business, politics and the economy by the writers and editors of Fortune. To see the entire package, click here.