An activist investor is an individual or group who buys a large number of shares in a public company and / or is seeking seats on the company’s board of directors to effect a meaningful change within the business. A business can become a target for activist investors if it is mismanaged, has excessive costs, and may be run more profitably as a private business or has some other problem that the activist investor believes can be resolved to make most valuable business.
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Private equity firms, hedge funds and high net worth individuals are types of entities that may decide to act as activist investors. One indication that a company may have become a target for activist investors is the filing of the SEC 13D form, which must be filed when an investor buys 5% or more of the shares of a company.
Many well-known activist shareholders, such as Carl Icahn and Nelson Peltz, conduct their business through their holding companies or hedge funds.
Carl Icahn is the founder of Icahn Enterprises, a diversified holding company which holds most of the investments made by Icahn. In the past, Icahn has taken positions in companies such as Yahoo Inc., Netflix Inc. and Clorox Company. One of Icahn’s most 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, 2020, Xerox Corporation announced the appointment of an Icahn partner to its board of directors.
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 best known moves include a short position in Herbalife Ltd. and its big bet on the struggling pharmaceutical company Valeant Pharmaceuticals International Inc. In 2003, Ackman partnered with Icahn for shares in Hallwood Realty, an agreement that led Ackman to sue Icahn for its profits. from the sale of shares.
David Einhorn is the founder and president of Greenlight Capital, a hedge fund he has managed for 20 years. Two of Einhorn’s most well-known pieces include the Lehman Brothers shorting and Allied Capital Corporation. In May 2020, Einhorn announced that Greenlight had acquired a $ 60 million stake in Yelp Inc.
Dan Loeb is the founder of the $ 10 billion hedge fund Third Point Partners. In 2020, Loeb took a position in Yahoo and finally got a seat on its board of directors. In 2020, Loeb announced that his company was the largest shareholder in Sotheby’s. Third Point also holds significant positions in Baxter International Inc. and Ligand Pharmaceuticals Inc.