What is an activist shareholder?
Activist shareholders use their position as a shareholder of a company to bring about change. Often activists will be campaigning around issues such as the environment, workers’ rights and political ethics. The term can also refer to investors who attempt to gain control of a company and replace management.
Where have you heard about activist shareholders?
In the 1980s, activist shareholder Carl Icahn became notorious as a “corporate raider” after acquiring an equity stake in B.F. Goodrich. The company was then forced to rid themselves of Icahn by buying back his investment at a large premium at the expense of other shareholders.
What you need to know about activist shareholders...
Shareholder activism is a way in which shareholders can actively influence a corporation's behaviour, for better or for worse. It allows them to influence the board of directors and management through informal dialogue with management and formal proposals that are voted on by all shareholders. In addition, studies have found that activist investment can result in greater returns than those achieved passively – activist investing was found to be the top-performing strategy among hedge funds in 2013.
Find out more about activist shareholders...
Activist shareholders need to understand the positions within a company, for example management and the board of directors.