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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References in periodicals archive ?
ATTEMPTS by Just Eat bosses to stave off activist investors calling for the food delivery platform to be sold have been given a boost by a new boardroom addition.
Attempts by the bosses of Just Eat to stave off activist investors calling for the food delivery platform to be sold have been given a welcome boost as the company unveiled a new boardroom addition.
Former chief executive Gavin Darby left in January, six months after withstanding a shareholder revolt led by activist investors Oasis Management and Paulson.
One of three activist investors looking to overhaul Bed Bath & Beyond's board of directors and top executive filed a complaint against the company Friday in the United States District Court, Southern District of New York.
"After reviewing the information contained in your correspondence, we find no basis to reconsider our position." The Verge notes that activist investors have pushed proposals that would require the company to audit its facial recognition tool Rekognition for potential civil rights concerns and to stop selling the tool to government agencies until a civil rights review is finished.
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Proxy advisory firms work for both sides: activist investors and the companies fighting the activist investors.
Activist investors are fund managers with deep pockets who perceive value so buy into a business and shake things up.