What is activist investing?

Activist investing is an investment strategy where an investor pursues poorly-run companies with share prices that have declined in recent times. Once a target is identified, the activist investor obtains a sizeable stake in the company’s equity, which often signals to the market that changes are soon to come.

Why do activist investors buy a lot of shares?

An investor who owns a few hundred or even a few thousand shares doesn't have much pull with management. Activist investors purchase (or short) a large enough percentage of a company's shares to demand and get attention. They also get a fair amount of media attention and use it to air their grievances.

Is activist investing a catalyst for change?

In activist investing, the catalyst for change and the turnaround is, in fact, the entrance of an activist investor. Activist investing is an investment strategy where an investor pursues poorly-run companies with share prices that have declined in recent times.

Do activist investors have a different investment horizon?

Activists can be a fickle bunch. They may latch onto a position and hold it for years. If they can't win a board seat or persuade the company to accept their agendas, they may bail at the drop of a hat. In short, it's important to note that activists may have a very different investment horizon from the average investor.