UK Accounting Glossary
An activist investor is an individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on the company’s board with the goal of effecting a major change within the company.
Activist Shareholders are investors who acquire an equity stake in a publicly traded company (PLC) as a means to attempt to influence company practice or policies.
Shareholders may be ethically motivated, perhaps desiring improvements in the environment or social impacts of said business, or they may be more fiscally motivated – and interested mainly in influencing the businesses strategy or management for profit related aims.
Shareholder activism can take any of several forms: proxy battles, publicity campaigns, litigation, even in the right circumstances more-or-less amicable negotiations with management.
For example, in September 2003, hedge fund manager Lawrence J. Goldstein created a new fund specifically for the purpose of using such activism to increase the value of targeted corporations’ equity. The resulting entity is known as the Santa Monica Partners Opportunity Fund LP,
A fairly small stake (less than 10% of outstanding shares) may be enough to launch a successful campaign.
Shareholder activism can take any of several forms: proxy battles, publicity campaigns, shareholder resolutions, litigation, and negotiations with management.
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This glossary post was last updated: 27th January 2019.