Posted in Finance, Accounting and Economics Terms, Total Reads: 237
Definition: Hands-Off Investor
Hands-Off Investors are the people who are part of the organization and have big stake in the organization i.e. have invested in equity shares in the organization but he/she do not take part in the day to day operations of the organization. The main purpose of such investor are to invest and share profit and losses but not be in the active participant in the management. These people somehow can come forward and act whenever they feel the organization need them.
The basic line is they have such a large stake in an organization that they have a right to take part in management but they choose to sit back and take part only when the organization is continuously making loses. Hands off Investor also refers to the investors that don’t change their portfolio so easily and they do minor changes whenever they feel like usually after a very long time. They don’t believe in changing the portfolio and hold their portfolio because these portfolios are fixed and do not much of monitoring.
Hands off investor is the one who knows what’s going in the organization, what decisions are recently taken and what plans the company is perusing but do not actually take part in doing some work. They actually ignore what it is actually happening in the organization. They don’t question the management but can turn into hands off investor whenever they feel like or whenever he sees the management is not acting like agents and doing things for their own interest.
It is different from hands on investor as hands on investor takes regular part in organization’s management and take decision, set plans, set strategies for the organization. Hands on investors have stake in the organization just like the hands off investors but they take part in day to day activities of the organization.