Notes

What is an Activist Investor?
What is an activist investor? An activist is an investor or organization that seeks to gain a stake in a business by taking seats on the business of the board of directors or other similar representation. Activists are typically looking to make major changes to the targeted company and/or unearnably unlock unseen hidden value in the targeted company. They believe that their role in the business will yield them financial rewards through dividends or other capital appreciation. It is for this reason that they may have taken positions against the targeted corporation in the past.

Why are most institutional investors against what is an activist investor. Most institutional investors have the belief that by injecting capital into a company, they are primarily doing what is best for the business as a whole. Therefore, they do not view an activist as being in the best interests of the investors. Of course, many of these same shareholders are large-company stock holders that also own a sizeable number of shares of the company.

There are two types of activist investor strategies. One strategy is used by hedge funds. Hedge funds are large teams of professionals who buy a large number of shares of a company and then try to make a difference by making direct calls to their broker on their own behalf to move capital from the broker-market into the hands of the target firm. This is a highly effective way to make a positive difference in the bottom line, but many hedge fund investors are closely regulated and must follow the direction of the regulators. If something happens to a particular investment, some high-risk investments may suffer as a result of the hedge fund investment.

Agency of activist investor strategies is the more general purpose strategies which include indirect and open advocacy of various issues concerning the target companies. This can take the form of writing articles or op-eds, calling for more meetings between management and shareholders, or even publishing a corporate governance journal. The overall objective is to encourage more capital investment in the target corporation through the utilization of this media. However, this is done carefully so as not to risk shareholder value or to put pressure on the CEO in order to sell off shares of the stock. For this reason, these types of strategies generally only have success on a very small scale.

Public company advocacy is a more extreme form of what is an activist investor strategy. There are some companies where shareholder activism has caused substantial changes in management and board decision making. For example, one popular issue was the corporation called Wal-Mart, which for several years was going under the watchful eye of a group of activists. After a series of shareholder lawsuits, Wal-Mart finally received a windfall of $3.7 billion due to investor pressure. This is a particularly important issue to pay attention to, as many of the largest corporations are controlled by a small group of families. This group of very wealthy individuals has a great influence over the direction of many major companies.

Activist investor tactics can also be used against larger companies, where there is less wealth to fight for a change. One such area is pharmaceuticals. Many pharmaceutical companies are highly profitable, but their profit margins are quickly eroded by the rising costs of medical services. In addition, some pharmaceutical companies have large investments in industries that are not health care related, such as plastics.

While some may question the value of activist investments in health care given the relatively small size of the sector, there is no doubt that activists have had some profound effects on the direction of many large corporations. Activists have successfully pressured major companies to remove CEO executives who are outspoken critics of environmental policies, and they have attempted to do the same with government officials over issues such as immigration. The efforts of activists, corporate executives, and other public interest groups have made a significant difference in the stock price of many publicly traded companies. These changes are especially noteworthy considering the fact that many institutional investors have shied away from these types of stocks due to their uncertain future.

What is an activist? It is probably best defined as someone who is willing to use direct-mail and other direct marketing techniques to promote a particular cause or belief. An individual who believes that the rights of workers should be protected, or that the corporations have too much control over political and economic policy, would be an ideal candidate for what is sometimes called "social media" investment. Examples of this type of social media would include the fight for better wages and workplace organizing and campaigning against corporate welfare.
Website: https://chessdatabase.science/wiki/How_to_Become_an_Activist_Some_Ideas