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Godwin Valenzuela posted an update 2 years, 1 month ago
What is an activist investor? Often, when someone asks us what is an activist investor we respond that he or she is one of these individuals. We have heard of them but not really understood what they did. We know that they are shareholders and often participate in lawsuits, but what exactly is the difference between a regular investor and an activist investor?
An activist investor is actually a shareholder of a company who attempts to exert his or her voting power in order to affect change in the corporation. These shareholders do not just participate in general meetings of the corporation. Instead, Agency that they feel could benefit from making changes to their corporate governance. These shareholders will bring suits against the company in an effort to force change. An activist investor may, for example, want more corporate governance changes so that he or she has a greater part in the company’s decision making.
Agency of these investors is usually profit. They would like to see a greater price for their stock or for the shares of stock they own. Sometimes this means pursuing a lawsuit. Many times, these activists are actually institutional investors. They are wealthy people that do not actually control or invest directly in the company that they are complaining about, but they have a vote, which can have an impact on the company’s stock price.
One thing that makes corporate shareholder activism distinct from other forms of activist investing is the fact that most shareholders are typically investors that own a small percentage of a publicly traded company. Public companies offer a wide range of choices to individual investors. Often, there are a wide variety of investment strategies available to choose from. The same is not true for publicly traded companies.
In the case of hedge funds, the only way to truly make an impact on the value of your investment is to convince a fund manager to change the investment strategies that he or she uses in order to take advantage of an opportunity. Agency or a financial planner can’t do that for you. You will need to provide a formal request to a hedge fund manager proposing a strategic change that you believe will be able to take the company to a higher level and provide the capital allocation you need. Of course, if you are able to demonstrate to the hedge fund manager that the proposed strategy will yield a higher return than the value of your investment, you may well be able to convince him or her to go ahead with the change.
Activists often go beyond simply pushing for greater capitalization for their preferred companies. Some engage in what is sometimes called teju activism. These activists use financial and technical means in order to pressurize companies into making larger changes, and they may also go as far as calling on the government for action.
In the case of teju activism, activists use what is called teju protest to try to force a social media giant like Facebook to remove a particular post or to shut down a certain website. This kind of activism often culminates in what is known as a “die-in” where hundreds or thousands of people stop using the social media site for a day. In many cases, this type of popular agitation is organized by groups of young people at colleges or universities who want to draw attention to a given issue. The goal is not so much to shut down the website or to have it taken down but rather to generate enough social media coverage to force a change of the social media giant in question.
What is Agency ? In the words of a popular Mexican song, an activist is “a mano a mano,” and while some activists may identify themselves as such to the media, in truth they are a diverse bunch of individuals with different interests, hopes and dreams. Many of them are working toward electing specific politicians, securing voting rights for certain groups of people, combating environmental pollution and other progressive issues, or simply making sure that the law and justice system work for all people. No matter what your direct interest may be, you can be a part of activism whether you want to or not and what is an activist is often anything but vague and generalized.