Activist Investor

Posted in Finance, Accounting and Economics Terms, Total Reads: 306

Definition: Activist Investor

An activist shareholder is an individual or group who purchases a high stake in a public companyvia equity shares. He may do so for reasons like increase of shareholder value through changes in corporate policy, financing structure, disinvestment from particular countries, adoption of environmentally friendly policies or many others. Even a stake small like less than 10% of outstanding shares would be enough to launch a successful campaign compared to a full takeover which is very difficult to execute.

Generally Private equity firms, hedge funds and wealthy individuals are types of entities that act as activist investors. Even smaller shareholders also voice their opinions.

For example, Carl Icahn is an activist investor and is the majority shareholder of Icahn Enterprises, a diversified holding company.



• Pull with the management

• Bringing fresh ideas in the management of the company

• Demand for shares move up


• Selling/buying a lot would significantly move prices

• Wrong decisions of activists affect significantly to markets



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