Activist investing is on the rise, in both the media (Bill Ackman vs. Carl Icahn debate, highly entertaining:
) and the stock market. For those unfamiliar with the concept, an activist investor’s goal is to obtain a seat on a public company’s board to be able implement change. They do this buy purchasing a substantial amount of shares in the targeted company. A lot of capital is required to be able to actually make an activist play, therefore the majority of activists are institutions or wealthy fund managers.Benefits of Activism - To Shareholders:
If company X has a great business, but is underperforming due to management, long shareholders are negatively impacted. If Carl Icahn (who will be brought up a lot in activism discussions), for example, came up with an idea that he believes will help turn the company around, he would try to buy enough shares to have decision making leverage. If his advice works well, the company’s stock will respond accordingly, therefore benefiting the passive investors in the company who do not capital to voice their opinions publicly.
Benefits of Activism - To The Overall Market:
Activists are increasingly gaining bargaining power within the market. Icahn was able to influence the biggest company in the world: Apple. Although he recently admitted on an episode of Wall Street Week that he thinks Tim Cook is a great CEO, there is always room for improvement. In many cases, activists compose ideas that management simply cannot or ever will think of. On the tech-heavy Nasdaq, a major increase in Apple could bring the index up a sizeable amount. On August 13, 2013, when Icahn tweeted about his large stake in Apple, the stock proceeded to rise 4%. In addition, according to Bloomberg, between 2009 and 2013 companies targeted by activists gained 48% (on average, which was 17% higher than the S&P 500).
Wrap-Up:
Overall, in an increasingly changing market, activism is here to stay and thrive. Some activists are so big that they can move markets with a single tweet (ie. Icahn), while others are slightly less outspoken but have the resources and ideas to influence positive change.
I’d like to hear your opinions on the current and future landscape of activism!
this site could do better. a lot.
Activist investors (Originally Posted: 04/07/2008)
I have been asked by a finance professor to create a list of every stock that has increased its dividend in response to activist investors. Any suggestions about how I could go about creating something like this? Capital IQ seems like the logical choice, but is not something I have access to. Any insight would be greatly appreciated.
You could read every 13D ever filed, but I don't think companies say they are going to raise their dividend because of an activist nor do activist generally specify that they want an increased dividend. In 13D filings the activist usually just demands for the company to explore strategic alternatives to realize shareholder value in the form of a special dividend, sale, divestiture, share buyback etc...
Lexis Nexus has gotten me part way there, but I'm really trying to find ways to get a complete list.
these guys track this kind of stuff for corporate managers, but most of their stuff requires subscription. there is some helpful content on there, though.
Anybody here with an Activist Investing background? (Originally Posted: 02/03/2011)
I have an idea/problem I want to bounce off someone with some activist experience, anybody here with time to kill?
shoot.
Shoot.
We have invested in two activist funds and have met several more managers - no direct experience though.
Here is a comprehensive list of Shareholder Activist Funds: http://www.hedgetracker.com/directory/Shareholder-Activist
Industry expert Michael R. Levin runs the below activist consulting firm. His website also has a lot of great activist resources: http://www.theactivistinvestor.com/
We see them somewhat, more in the distressed/restructuring space.
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