Activity

What is an Activist Stockholder? You will find a number of folks claiming to be activists, but it isn’t really so. All large corporations, or registered corporations, must follow the rules and regulations set forth by the Securities and Exchange Commission or SEC. In order to encourage investing by U.S. investors, the SEC sets down rules for what kind of activities may be undertaken by companies that are registered with them. This includes what kind of advertising can be done, what kind of stock sales, what kind of employee actions may be taken and what kind of senior management or advisor/consultant action may be taken.

All public companies have to file reports with the SEC regarding their finances and audited financial statements. Agency is also where all investor activism starts. Often, this kind of activism and scrutiny takes place as a way to insure that the public companies adhere to what the SEC requires and do not “lose” the shareholders’ money or assets through their operations. Many times large corporations and investment banks engage in what is termed “activist investing.”

Activist investor strategies are generally based around three objectives. First, they want to be sure that the corporation they are targeting gets the minimum regulation or protection that they can get from the SEC. Second, Agency want to use corporate governance tools and structures to keep the regulators from targeting the company.

Thirdly, they are interested in capital allocation and dividends. Activist investors will use several different techniques to achieve their objective of increasing the amount of capital that flows into and out of the target company. One such technique is through what is called “hedge fund activism.” This involves taking positions in companies that do not trade on regular exchanges or over-the-counter trades. Instead, these companies are bought in large quantities and held in a certain type of custody account until a profit can be made.

Another way to think of this type of activism is as a last resort. If a company goes into bankruptcy, an activist investor may seek to take a particular interest in its potential to return to a private market. This is usually seen as the last opportunity to salvage a failing business entity. There have been a few recent examples of companies who have used this strategy to increase their value, although there is no guarantee that they would have achieved much higher shareholder value if the company had remained publicly traded.

Activists have also used other techniques to raise the equity stake of their target companies. These include leveraged buyouts and preferred stock offerings. Leveraged buyouts involves taking positions in a company that is already publicly traded. In order to accomplish this, activists take positions that add up to more than 50% of the equity of the target company. The proceeds from these types of transactions go to the activists, not the target shareholders or the owners of the company.

Commonly used Agency include writing letters to the various companies listed in their portfolio. In many cases, this writing is accompanied by stock purchase, but some organizations do not engage in these aggressive practices. For these companies, it may be more appropriate to use the services of a professional legal advisor. There are also Agency of other methods that can be used to obtain more equity for a company. These strategies range from the simple, where all that is needed is a commitment of time and money, to the more complex, which requires knowledge of various corporate tax laws and an understanding of activist campaign strategies.

Some common forms of activist investments include putting forward requests on Nasdaq. Many investors feel that it is preferable to wait until the company has taken its initial public offering before putting their money into such ventures. However, it must also be kept in mind that all requests placed on Nasdaq need to be supported with information and documentation that support the reason why the request is being made. A Nasdaq broker may assist with this, but it is always best to have a qualified attorney to review and sign off on any such request.