Practical Considerations for Activist Pitch
I'm formulating a pitch for a small activist fund, and while I understand the business/valuation/catalyst aspect of activism, I can use some help in understanding what practical/technical aspects must be considered. For example, are there any soft or hard guidelines for shares outstanding or % float that a fund would examine? IE at what point is public float too small or management ownership too high to consider passing on an otherwise attractive activist candidate? Is there a guideline for minimum trading volume? Given some level of trading volume, is there a way to estimate how long it would take to gather a desired stake without affecting the market price to an outsized degree? Also, how should one think about current ownership, whether it's mostly mutual funds, other value funds, or even other activists?
Any guidance here would be greatly appreciated.
Not at an activist fund but have done some activism in the past and have friends working in the space, so others feel free to correct me. Is this for a case? Or putting something together to advertise yourself to funds? Would think to make sure you have 1) fully diluted share count, 2) details on any dual class share structure...campaign would be a waste of time if insiders all own super voting class b shares, 3) existing larger holders - any activists? some funds don't want to go into a situation that already has a controlling shareholder / engaged activist, 4) some estimate of how much stock you'd need to buy to have a voice...3%? 5%? Keep in mind levels that trigger 13Ds, 5) ability to actually execute...look at ADV stats...if you wanted to buy 4.9% outstanding and take up no more than 25% of ADV, how long would that take and is that time frame realistic? These are all things you can check for before actually starting the fundamental work...really helps to know whether a situation is actionable or not before going down the rabbit hole.
Thank you for the helpful reply. I'm qualifying ideas myself with the goal of writing up an idea to send out to a few select funds. I would like to sound knowledgeable in activist practices in hopes of finding something that could be considered actionable.
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