Activist investors can be a shareholder’s best friend

Activist investors are feared by corporate CEOs the world over and have, over the years, built up a reputation as the unruly shake-up masters of Wall Street. While not all activist investors are created equal, a number of them do deploy rather crude and in-your-face strategies, sometimes with the intent of instilling shock and awe.

One rather basic strategy involves the activist building up a meaningful position in the target company’s outstanding float of stock, trying to add their own board members and then (as a meaningful shareholder) attempting to effect predetermined changes in the company. Often, the initial demands or suggested changes to the company are communicated by way of a letter to the company’s management and/or board of directors.

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