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07 Activist Investor

An activist investor is an individual or group that buys large amounts of a public company's stock in order to effect change within the company. They target companies that are mismanaged or not reaching their full potential. Private equity firms, hedge funds, and wealthy individuals may take activist investor stakes. When an investor acquires 5% or more of a company's shares, they must file an SEC Form 13D. Well-known activist investors like Carl Icahn and Bill Ackman engage in activism through their holding companies and hedge funds, pushing for actions like management changes, spin-offs, and increased share buybacks.

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31 views

07 Activist Investor

An activist investor is an individual or group that buys large amounts of a public company's stock in order to effect change within the company. They target companies that are mismanaged or not reaching their full potential. Private equity firms, hedge funds, and wealthy individuals may take activist investor stakes. When an investor acquires 5% or more of a company's shares, they must file an SEC Form 13D. Well-known activist investors like Carl Icahn and Bill Ackman engage in activism through their holding companies and hedge funds, pushing for actions like management changes, spin-offs, and increased share buybacks.

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Gna Ong
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Activist Investor

By WILL KENTON
 Updated Jun 25, 2019
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
to effect a significant change within the company. A company can become a
target for activist investors if it is mismanaged, has excessive costs and could
be run more profitably as a private company or has another problem that the
activist investor believes it can fix to make the company more valuable.

Breaking Down Activist Investor


Private equity firms, hedge funds, and wealthy individuals are types of entities
that might decide to act as activist investors. One indication that a company
may have become a target for activist investors is the filing of SEC Form 13D,
which must be filed when an investor purchases 5% or more of a company's
shares.

Many well-known activist shareholders, such as Carl Icahn and Nelson Peltz,


engage in their business activities through their holding companies or hedge
funds.

Carl Icahn
Carl Icahn is the founder of Icahn Enterprises, a diversified holding company
that owns many of the investments that Icahn makes. In the past, Icahn has
taken positions in companies such as Yahoo Inc., Netflix Inc., and the Clorox
Company. One of Icahn's more notable investments was in Apple Inc. He
bought 4.7 million shares of the company and pushed for a $150 billion share
buyback. On June 27, 2016, Xerox Corporation announced it was putting an
Icahn associate on its board of directors.

Bill Ackman
Bill Ackman is the founder and chief executive officer (CEO) of the Pershing
Capital hedge fund. Pershing has taken positions in Target Corporation and
Wendy's Company. Ackman's more well-known moves include a short
position in Herbalife Ltd. and his big bet on troubled drug company Valeant
Pharmaceuticals International Inc. In 2003, Ackman partnered with Icahn for
shares of Hallwood Realty, a deal that resulted in Ackman suing Icahn over
profits from the share sale.

David Einhorn
David Einhorn is the founder and president of Greenlight Capital, a hedge
fund he's managed for 20 years. Two of Einhorn's more well-known plays
include shorting Lehman Brothers and Allied Capital Corporation. In May
2016, Einhorn announced that Greenlight had taken a $60 million stake in
Yelp Inc.

Dan Loeb
Dan Loeb is the founder of the $10 billion hedge fund Third Point Partners. In
2012, Loeb took a position in Yahoo and eventually gained a seat on its board
of directors. In 2013, Loeb announced that his company was the largest
shareholder in Sotheby's. Third Point also has sizable positions in Baxter
International Inc. and Ligand Pharmaceuticals Inc.

Reference:
https://www.investopedia.com/terms/a/activist-investor.asp

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