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Hear the term ‘Activist investors’ and you might think GetUp, the progressive activist group that forced Woolworths to hold an EGM in 2014 in an attempt to limit the maximum bets on poker machines to $1. The reality is a lot more complicated and we are going to delve into it in this article.
Who are activist investors?
Activist investors are individuals or groups who purchase a large number of shares in a company with the intention of influencing its decisions and policies. They use their ownership stake to advocate for changes that they believe will increase the value of their investment and benefit all shareholders.
They’re not individual retail investors who group together, they are large institutional shareholders. These investors often take an active role in the operations and management of the company, pushing for changes in areas such as corporate governance, financial performance, and strategic direction. They can be a powerful force in the business world, often making headlines with their high-profile campaigns and battles with company management.
4 of the most Famous Activist Investors
Here are 4 of the most famous activist investors.
First is Carl Icahn, a billionaire investor and one of the most well-known activist investors in the world. He has been involved in numerous high-profile corporate battles, including his successful takeover of TWA in the 1980s and his failed attempt to take over Time Warner in 2006. Icahn is known for his aggressive tactics and has been described as a “corporate raider” by some. He is also known for his ability to turn struggling companies around and increase their value.
Second on our list is Nelson Peltz, the co-founder of Trian Fund Management, an activist investment firm that manages over $10 billion in assets. He is known for targeting large companies and pushing for changes in their management and operations. Peltz has been involved in some high-profile campaigns, including his successful restructuring of Heinz in the early 2000s. He is also known for his long-standing feud with fellow billionaire investor Carl Icahn.
Third is Bill Ackman, the founder of Pershing Square Capital Management, a hedge fund that focuses on activist investing. He made headlines in 2012 when he took a $1 billion short position against nutritional supplement company Herbalife, calling it a pyramid scheme. Ackman is known for his strong opinions and aggressive tactics, often publicly criticizing the companies he invests in. He has also been involved in several high-profile battles with other investors, including Carl Icahn and Nelson Peltz.
Finally, we thought we’d share with you arguably the most famous in Australia, Sandon Capital – a firm headed by Gabriel Radzyminski. This firm has been in plenty of battles in the past (with Iluka, City Chic, Fleetwood and A2B), so let’s focus on its most high-profile current battle. It is battling struggling fund manager Magellan (ASX:MFG), pushing against its plans to grow FUM to $100bn in 5 years and arguing for it to return capital to shareholders, through the sale of its Barrenjoey and Finclear stakes. Sandon argued it would be a way to apologise for past wrong-doing and depict that its interest and that of shareholders were aligned. Although the AGM came and went without a return of capital in the form Sandon was suggesting, the company ditched is FUM ambition.
Activist investors play a significant role in corporate governance and can have a major impact on the direction and success of companies. While they may be controversial at times, their actions are often driven by a desire to create value for shareholders and improve overall business performance. As such, they will continue to be important players in the world of finance and investing and all other investors should keep an eye on them.
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