- Activist shareholder
An activist shareholder uses an equity stake in a
corporationto put public pressure on its management. The goals of activist shareholders range from financial (increase of shareholder value through changes in corporate policy, financing structure, cost cutting, etc.) to non-financial ( disinvestmentfrom particular countries, adoption of environmentally friendly policies, etc.). The attraction of shareholder activism lies in its comparative cheapness; a fairly small stake (less than 10% of outstanding shares) may be enough to launch a successful campaign. In comparison, a full takeover bid is a much more costly and difficult undertaking.
Shareholder activism has gained popularity as management compensation at
publicly tradedcompanies and the rising cash balances on corporate balance sheets have risen.
Shareholder activism can take any of several forms: proxy battles, publicity campaigns,
shareholder resolutions, litigation, and negotiations with management. Daniel Loeb, head of Third Point Management, is notable for his use of sharply written letters directed towards the CEOs of his target companies.
Some of the recent activist investment funds include: Icahn Management LP, Santa Monica Partners Opportunity Fund LP and Relational Investors, LLC.
Due to the increasing popularity of the internet, smaller shareholders have also gained an outlet to voice their opinions. In 2005, small MCI Inc shareholders created an online petition to protest the MCI Inc/Verizon merger.
Notable Activist Investors
T. Boone Pickens, Jr.
Sister Patricia Daly
Socially responsible investing
* [http://money.cnn.com/2006/02/07/news/companies/timewarner_icahn/index.htm Icahn calls for Time Warner breakup, buyback / CNNMoney.com]
* [http://sec.gov/Archives/edgar/data/1002590/000089914005000128/t2774169.txt Third Point Management's letter to Star Gas CEO, Irik Sevin]
* [http://denver.bizjournals.com/denver/stories/2005/05/02/daily1.html?page=2 Qwest Withdraws from Bidding - Denver Business Journal / MCIpetition.com ]
* [http://www.ecgi.org/activism/ Academic Literature Summary]
Wikimedia Foundation. 2010.
Look at other dictionaries:
Shareholder resolution — Shareholder resolutions are proposals submitted by stockholders for a vote at the company s annual meeting. Typically, resolutions are opposed by the corporation s management, hence the insistence for a vote. For publicly held corporations in the … Wikipedia
Shareholder Activist — A person who attempts to use his or her rights as a shareholder of a publicly traded corporation to bring about social change. Some of the issues most often addressed by shareholder activists are related to the environment, investments in… … Investment dictionary
William Felix Browder — See also William Browder (mathematician) William Felix Browder (born in 1964) is the CEO and co founder of the investment fund Hermitage Capital Management.BiographyHe is the grandson of Earl Browder, the former leader of the Communist Party, USA … Wikipedia
Street name securities — In the United States street name securities are securities of publicly traded companies held electronically in the account of a stock broker, similar to a bank account. The actual shareholder is referred to as the beneficial owner. In the United… … Wikipedia
Richard Li — This article is about the businessman. For the film director, see Li Han Hsiang. Richard Li Born 8 November 1966 (1966 11 08) (age 45) Hong Kong Citizenship Canadian … Wikipedia
Risk arbitrage — Risk arbitrage, or merger arbitrage, is an investment or trading strategy often associated with hedge funds. Two principal types of merger are possible: a cash merger, and a stock merger. In a cash merger, an acquirer proposes to purchase the… … Wikipedia
William A. Conway — (b. April 16 1910, Newark, New Jersey d. March 31 2006).William A. Conway was born in Newark, but resided for much of his life in Chatham, New Jersey and Summit, New Jersey. William A. Conway s career was notable for the fact that he rose from… … Wikipedia
Hands-On Investor — An investor who holds a large portion of a company s shares and takes an active management role. A hands on investor can also be called a majority shareholder, or activist shareholder. Such investors see their ownership stake in a firm as the… … Investment dictionary
Australia — /aw strayl yeuh/, n. 1. a continent SE of Asia, between the Indian and the Pacific oceans. 18,438,824; 2,948,366 sq. mi. (7,636,270 sq. km). 2. Commonwealth of, a member of the Commonwealth of Nations, consisting of the federated states and… … Universalium
Day trading — This article is about the practice. For the occupation, see Day trader. Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close… … Wikipedia