Activist Investor

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Activist Investor

A minority shareholder who seeks to influence decision making at a company by voicing concerns, engaging in a dialogue with management, or lobbying other shareholders for support. The demands could relate to changes in management, representation on the board, acquisitions or divestitures, salaries, bonus payments, use of retained earnings etc.

Activist Investor

A shareholder or group of shareholders in a publicly-traded company that tries to make changes in management and/or operations in a way that suits the shareholder(s)' interests. Activist investors deliberately acquire substantial stakes in certain companies and therefore wield enough influence that the company often must listen to them. Activist investors may choose to negotiate directly with the company or indirectly though methods like proxy wars or public shaming. Activist investors may be motivated by ethical concerns; they may want the company to pay its workers better, for example. More often, they wish to change the company in a way that will maximize their own return. Activist investors may be investment companies, institutional investors, shareholder groups, or even wealthy individual shareholders.

Activist investor.

An activist investor attempts to force a corporation to make changes in management, board structure, investment policies, use of retained earnings, or other practices, often by introducing shareholder proposals or putting forward alternative directors.

Activist investors may be hedge funds, institutional investors, such as money managers or pension funds, wealthy individual investors, or groups of investors with a common cause.

Some activists deliberately accumulate substantial stakes in undervalued companies to force changes that will increase the share price so they can sell at a profit. Others, such as long-time or majority stakeholders, may object to current management practices, prefer an independent board of directors, or want a voice in executive pay. While they seek improvement to the bottom line, they may also be committed to strengthening the company in other ways.

Activist methods vary as well. Some wage public relations and proxy wars while others seek to implement their proposals through negotiation. In recent years activists have achieved a number of goals including increased respect for their power to effect change.

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Activist investors aim to make money by buying shares of companies and then pushing them to change their strategies.
Similarly, the funds available to activist investors have grown 153% over the same period to $120bn worth of assets under management.
Historically, spin-offs, IPOs and firms targeted by activist investors have generally outperformed the broad market as they uncover value and increase efficiencies.
According to the A T Kearney survey of chemical executives and members of the M&A community activist investors are likely to drive the increase in deals, putting pressure on chemical majors to divest assets seen as underperforming.
May 2, 2014), the Court of Chancery found that a two-tiered poison pill adopted by Sotheby's, which limited activist investors to 10 percent stakes but permitted passive investors to acquire up to 20 percent, was a reasonable and therefore legally permissible response to rapid acquisitions of its stock by activist hedge funds.
And the latest news of weak sales at PetSmart has led activist investors to pressure PetSmart to review its strategic options.
IN JUNE 2013, activist investors got the board of SandRidge Energy to fire its CEO Tom Ward, arguing that he had mismanaged the Oklahoma City company and destroyed billions in shareholder value.
She explained that activist investors can sell their shares at any time, which means their short-term interests might clash with the more long-term plans of a REIT's management and some of its other investors.
During a standstill period, activist investors typically agree to refrain from certain activities such as buying more shares.
Houstin: Emboldened by a $40 billion windfall and success this year in kicking out chief executives, activist investors are poised to shake up more boardrooms in 2014.
market practices have, over time, enabled activist investors to increase
Stressing corporate social responsibility, the value of transparency, and the negative consequences of manipulating financial information, he gives advice on immunizing the company from class action lawsuits and handling activist investors intruding on the company's turf.