Activist shareholder

An activist shareholder is a shareholder that uses an equity stake in a corporation to put pressure on its management.[1] The goals of activist shareholders range from financial (increase of shareholder value through changes in corporate policy, financing structure, cost cutting, etc.) to non-financial (disinvestment from particular countries, adoption of environmentally friendly policies, etc.).[2] According to research firm Activist Insight, a total of 922 listed companies globally were publicly subjected to activist demands in 2018, up from 856 in 2017.[3]

A fairly small stake (less than 10% of outstanding shares) may be enough to launch a successful campaign. In comparison, a full takeover bid is a much more costly and difficult undertaking.

The financial form of shareholder activism has gained popularity as management compensation at publicly traded companies and cash balances on corporate balance sheets have risen. Not only are the aggregate dollars invested in the activist asset class continuing to grow, but activists are also generating significant positive attention from mainstream media by taking more sophisticated approaches to identifying their platforms and running their campaigns.[4] Once derided as corporate raiders, shareholder activists are now the recipients of admiration for sparking change in corporate boardrooms, leading to corporate boards developing best practices for responding to shareholder activism.[5] Activists increasingly are transitioning from outside agitators to influential insiders. In fact, some well-established activists were able to secure board seats without running a proxy contest in 2015.[6]

Shareholder activists are making their mark on M&A activity as well – a 2015 survey of corporate development leaders found that 60% of respondents saw shareholder activism affecting transaction activity in their industry.[7] Increasingly, however, the non-financial form of shareholder activism is affecting companies in a range of sectors. Shareholders, often with a comparatively small stake in a company, are seeking to influence the company's environmental and social performance.[8]

Shareholder activism can take any of several forms: proxy battles, publicity campaigns, shareholder resolutions, litigation, and negotiations with management. Daniel Loeb, head of Third Point Management, is notable for his use of sharply written letters directed towards the CEOs of his target companies.

Some of the recent activist investment funds include: California Public Employees' Retirement System (CalPERS),[9] Icahn Management LP, Santa Monica Partners Opportunity Fund LP, State Board of Administration of Florida (SBA),[10][11][12][13] and Relational Investors, LLC.

Due to the Internet, smaller shareholders have also gained an outlet to voice their opinions. In 2005, small MCI Inc. shareholders created an online petition to protest the MCI/Verizon merger.


Vereenigde Oostindische Compagnie spiegelretourschip Amsterdam replica
Replica of an East Indiaman of the Dutch East India Company/United East Indies Company (VOC).

The practice of shareholder activism has its roots in the 17th-century Dutch Republic, with pioneering activist shareholders like Isaac Le Maire, a sizeable shareholder of the Dutch East India Company (VOC).[14][15][16][17][18][19]

Notable investors

During the 1980s, notable activist investors such as Carl Icahn and T. Boone Pickens gained international notoriety and were often perceived as "corporate raiders" for acquiring an equity stake in publicly owned companies, like Icahn's investment in B.F. Goodrich, and then forcing companies to take action to improve value or rid themselves of rebel intruders like Icahn by buying back the raider's investment at a fat premium, often at the expense of the other shareholders.

In an Opalesque TV interview with notable activist investor Phillip Goldstein of Bulldog Investors, Goldstein describes the role of an activist investor as that of a catalyst unlocking value in an underlying security. He goes on to say that the public perception of activist investors has changed, and this image of "corporate raiders" has dissipated.[20]

Notable activist investors:[21]

A list of institutional activist investors in the United States that filed appropriate disclosure forms with the SEC within the most recent 12 months, can be found on Fintel.[23]

Notable scholarship

New research published at The University of Oxford revisits the assumption that all shareholder activism is the same, characterizing Bill Ackman's activities with Canadian Pacific Railway as paradigmatic of "engaged activism" – which is longer term in nature with correlated benefits to the real economy, as distinct from shorter term "financial activism".[24]


Taking an activist approach to public investing may produce returns in excess of those likely to be achieved passively. A 2012 study by Activist Insight showed that the mean annual net return of over 40 activist-focused hedge funds had consistently outperformed the MSCI world index in the years following the global financial crisis in 2008.[25] Activist investing was the top-performing strategy among hedge funds in 2013, with such firms returning, on average, 16.6% while other hedge funds returned 9.5%.[26]

Socially responsible investing

Organizations such as the Interfaith Center on Corporate Responsibility (ICCR), As You Sow and Ceres use shareholder resolutions, and other means of pressure, to address issues such as sustainability and human rights.


Shareholder activism directed at both European and American companies has been surging.[27] Numerous studies try to examine firm characteristics that lead to shareholder activism. A seminal work in the field was brought forward by Michael Smith in 1996 in an article published in the Journal of Finance.[28] Researchers also try to understand what makes company a desirable target for an activist investor.[29] Lately, both scholars and practitioners started using machine learning methodologies to predict both targets and activists.[30]

See also


  1. ^ Reasonable Investor(s), Boston University Law Review, available at:
  2. ^ Carried Interest: "Activist Investor Definition" [1]. Retrieved 17 July 2015.
  3. ^ "The Activist Investing Annual Review 2019".
  4. ^ Grossman, Richard; Arcano, Stephen. "Navigating Today's Shareholder Activism Landscape". Transaction Advisors. ISSN 2329-9134. Archived from the original on 2014-11-08.
  5. ^ Golden, Peter; Richter, Philip; Schwenkel, Robert; Shine, David; Sorkin, John; Weinstein, Gail. "Shareholder Activism in M&A". Transaction Advisors. ISSN 2329-9134. Archived from the original on 2014-11-09.
  6. ^ Gerber, Marc. "US Corporate Governance: Have We Crossed the Rubicon". Transaction Advisors. ISSN 2329-9134. Archived from the original on 2016-06-05.
  7. ^ Ruggeri, Chris; Kirschner, Ken; Blanchard, Tony. "Corporate Development Strategy: Thriving in your Business Ecosystem". Transaction Advisors. ISSN 2329-9134. Archived from the original on 2017-02-02.
  8. ^ Cundill, Gary (2017). "Non-financial shareholder activism: a process model for influencing corporate environmental and social performance". International Journal of Management Reviews. 20 (2): 606–626. doi:10.1111/ijmr.12157.
  9. ^ Forbes: "Calpers Votes Against Jamie Dimon, Again" "Archived copy". Archived from the original on 2016-03-04. Retrieved 2017-08-23.CS1 maint: Archived copy as title (link). Retrieved June 28, 2013.
  10. ^ Eric, Finseth (2011). "Shareholder Activism by Public Pension. Funds and the Rights of Dissenting. Employees under the First Amendment" (PDF). Harvard Journal of Law & Public Policy. 34 (1): 289–366. Retrieved 28 June 2013.
  11. ^ "FLORIDA SBA" "Archived copy". Archived from the original on 2013-05-11. Retrieved 2013-06-28.CS1 maint: Archived copy as title (link) Retrieved June 28, 2013.
  12. ^ State Board of Administration: "SBA Corporate Governance Principles & Proxy Voting Guidelines" [2] Retrieved June 28, 2013.
  13. ^ Harvard Law School Forum on Corporate Governance and Financial Regulation: "Florida SBA Supports Proxy Access and Advisory Firm Transparency" "Archived copy". Archived from the original on 2014-08-01. Retrieved 2013-06-28.CS1 maint: Archived copy as title (link) Retrieved June 28, 2013.
  14. ^ Frentrop, Paul (2009). The First Known Shareholder Activist: The Colorful Life and Times of Isaac le Maire (1559–1624), in Frentrop/Jonker/Davis 2009, 11–26
  15. ^ Frentrop, Paul; Jonker, Joost; Davis, S. (ed.), (2009). Shareholder Rights at 400: Commemorating Isaac Le Maire and the First Recorded Expression of Investor Advocacy (The Hague: Remix Business Communications, 2009)
  16. ^ Gelderblom, Oscar; De Jong, Abe; Jonker, Joost (2010). Putting Le Maire into Perspective: Business Organization and the Evolution of Corporate Governance in the Dutch Republic, 1590–1610, in J. Koppell, ed., Origins of Shareholder Advocacy. (New York: Palgrave Macmillan)
  17. ^ McRitchie, James (6 Oct 2011). "Will UNFI Go Virtual-Only Again? Not if Shareowners Just Say No". Archived from the original on 2016-06-25. Retrieved 28 Dec 2016.
  18. ^ Mueller, Dennis C. (ed.), (2012). The Oxford Handbook of Capitalism, p. 333. (New York: Oxford University Press)
  19. ^ Hansmann, Henry; Pargendler, Mariana (2013). The Evolution of Shareholder Voting Rights: Separation of Ownership and Consumption. (Yale Law Journal, Vol. 123, pp. 100–165, 2014)
  20. ^ "Phil Goldstein: The Bulldog's passion for value investing". Opalesque TV. 21 Jan 2011. Retrieved 15 Jul 2018.
  21. ^ Carried Interest: "Activist Investors". Retrieved 6 May 2015.
  22. ^ "Takeover Bids for Chrysler, GM, Ford" Kirk Kerkorian#Automobile industry. Retrieved July 12, 2012.
  23. ^ "Activist Investors – The Complete List". Archived from the original on 5 October 2017. Retrieved 15 September 2017.
  24. ^ Rojas, Claudio. "Eclipse of the Public Corporation Revisited: Concentrated Equity Ownership Theory". The University of Oxford. Archived from the original on July 28, 2017. Retrieved June 27, 2017. ("A common misconception, that all shareholder activists are focused on short-term returns, is rooted in an antiquated phase in US capital markets history – particularly, the highly opportunistic transactions of 1980’s ‘corporate raiders’. In recent years, however, shareholder activism has noticeably shifted towards longer-term value creation."
  25. ^ Activist Insight: "New Shareholder Activist Index Reveals Rewards of Activist Investing" "Archived copy" (PDF). Archived (PDF) from the original on 2015-06-23. Retrieved 2012-12-12.CS1 maint: Archived copy as title (link). Retrieved December 12, 2012.
  26. ^ Wood, John; Dysart, Theodore. "Assessing the Merits of an Activist Investor's Point of View". Transaction Advisors. ISSN 2329-9134. Archived from the original on 2015-07-23.
  27. ^ "20 Places You Should be Sharing Your Content". 2018-06-14.
  28. ^ Smith, Michael P. (1996). "Shareholder Activism by Institutional Investors: Evidence from CalPERS". The Journal of Finance. 51: 227–252. doi:10.1111/j.1540-6261.1996.tb05208.x.
  29. ^ Logsdon, Jeanne M.; Van Buren, Harry J. (2008). "Justice and Large Corporations". Business & Society. 47 (4): 523–548. doi:10.1177/0007650308316524.
  30. ^ "Shareholder Activism: Wir sagen voraus wen es trifft!".

Further reading

Alliance Trust

Alliance Trust PLC is a publicly traded investment and financial services company, established in 1888 and headquartered in Dundee, Scotland. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. It is one of the largest investment trusts in the UK.

Alternative investment

An alternative investment or alternative investment fund (AIF) is an investment or fund that invests in asset classes other than stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as precious metals, art, wine, antiques, coins, or stamps and some financial assets such as real estate, commodities, private equity, distressed securities, hedge funds, carbon credits, venture capital, film production, financial derivatives, and cryptocurrencies. Investments in real estate, forestry and shipping are also often termed "alternative" despite the ancient use of such real assets to enhance and preserve wealth. In the last century, fancy color diamonds have emerged as an alternative investment class as well. Alternative investments are to be contrasted with traditional investments.

Center for Media and Democracy

The Center for Media and Democracy (CMD) is a progressive nonprofit watchdog and advocacy organization based in Madison, Wisconsin. CMD publishes PR Watch, SourceWatch, and

Crescent Point Energy

Crescent Point Energy Corp. is an oil and gas company based in Calgary, Alberta, Canada and Denver, Colorado, United States. The company focuses primarily on light oil production in southern Saskatchewan and the Uinta basin in Utah.

Since inception in 2001, Crescent Point has significantly increased its production. It has been ranked as Canada's 12th largest oil and gas producer.


Crikey is an Australian electronic magazine comprising a website and email newsletter available to subscribers. Crikey was described by former Federal Opposition Leader Mark Latham as the "most popular website in Parliament House" in The Latham Diaries. It had in 2014 around 17,000 paying subscribers.

Davidson Kempner Capital Management

Davidson Kempner Capital Management LP (“Davidson Kempner”) is a global institutional investment management firm with approximately $30.9 billion in assets under management as of January 31, 2018. The firm was founded in May 1983 by Marvin H. Davidson and is led by Thomas L. Kempner, Jr. and Anthony A. Yoseloff, who are Co-Executive Managing Members at the firm.Davidson Kempner is headquartered in New York City, with additional offices in London, Dublin and Hong Kong. As of June 30, 2017, Davidson Kempner was ranked as the 13th largest hedge fund in the world.Davidson Kempner has approximately 315 employees in the firm’s four offices. The firm is headquartered at 520 Madison Avenue in New York, New York.

Donato Tramuto

Donato J. Tramuto (born 1956) is an American healthcare executive and global health activist. In 2008, he founded an online service for drug detailing and sampling, Physicians Interactive, which by 2015 had a membership of 3 million healthcare practitioners. He also founded a nonprofit program, Health eVillages, to provide curated medical information to clinicians in remote areas.In 2013 he was elected to the board of healthcare firm Healthways Inc. after an activist shareholder threatened a proxy fight over its performance; two years later he was appointed president and CEO. He restructured the company and rebranded it as Tivity Health.Tramuto was elected to the Town of Ogunquit Board of Selectmen in 2006 and served two terms as chairman.

E. Hunter Harrison

Ewing Hunter Harrison (November 7, 1944 – December 16, 2017) was a railway executive who served as the CEO of Illinois Central Railroad (IC), Canadian National Railway (CN), Canadian Pacific Railway (CPR), and CSX Corporation. He died on December 16, 2017, two days after taking medical leave from CSX.

Fund of funds

A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A fund of funds may be "fettered", meaning that it invests only in funds managed by the same investment company, or "unfettered", meaning that it can invest in external funds run by other managers.

There are different types of FOF, each investing in a different type of collective investment scheme (typically one type per FOF), for example a mutual fund FOF, a hedge fund FOF, a private equity FOF, or an investment trust FOF. The original Fund of Funds was created by Bernie Cornfeld in 1962. It went bankrupt after being looted by Robert Vesco.

Glenview Capital Management

Glenview Capital Management is a hedge fund founded in 2000 with approximately $16.5 billion of capital under management as of December 2017. Glenview manages capital for investors through a series of private investment funds. The firm was founded by Larry Robbins, the firm's CEO and portfolio manager, and is based in New York.

Gramercy Funds Management

Gramercy Funds Management is an investment manager dedicated to emerging markets.The firm is headquartered in Greenwich, Connecticut with offices in London, Hong Kong, and Buenos Aires.Gramercy was founded in 1998 and is registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisors Act of 1940.

J Robert Verdun

J Robert Verdun is an activist shareholder-rights Canadian advocate, an author and a former editor of a weekly paper. He was also a defendant in an important defamation lawsuit.

John Antioco

John Antioco is the former CEO of Blockbuster Video. He is the chairman of the board of directors at Red Mango and the Managing Partner of JAMCO Interests LLC. He holds a degree in Business Administration from the New York Institute of Technology.

In 2000, when Antioco was CEO of Blockbuster, he declined an offer to purchase Netflix for $50 million. He also refused a proposal from Netflix to run Blockbuster's online presence.Antioco was a member of the board of governors of the Boys & Girls Clubs of America.

Outline of finance

The following outline is provided as an overview of and topical guide to finance:

Finance – addresses the ways in which individuals and organizations raise and allocate monetary resources over time, taking into account the risks entailed in their projects.

Special situation

Special situation in finance is an event turning business to go not as usual and materially impacting a company's value. The notion covers restructuring of a company and corporate transactions such as spin-offs, share repurchases, security issuance/repurchase, asset sales, or other catalyst-oriented situations. A conflict of shareholders is also considered a special situation.

To take advantage of special situations, a hedge fund manager must identify an upcoming event that will increase or decrease the value of the company's equity and equity-related instruments.

Taxation of private equity and hedge funds

Private equity funds and hedge funds are private investment vehicles used to pool investment capital, usually for a small group of large institutional or wealthy individual investors. They are subject to favorable regulatory treatment in most jurisdictions from which they are managed, which allows them to engage in financial activities that are off-limits for more regulated companies. Both types of fund also take advantage of generally applicable rules in their jurisdictions to minimize the tax burden on their investors, as well as on the fund managers. As media coverage increases regarding the growing influence of hedge funds and private equity, these tax rules are increasingly under scrutiny by legislative bodies. Private equity and hedge funds choose their structure depending on the individual circumstances of the investors the fund is designed to attract.

William A. Conway

William A. Conway (April 16, 1910 – March 31, 2006) was a Wall Street messenger boy who rose to CEO of Garden State National Bank ("Garden State"), but he is best remembered for his efforts working as an activist shareholder of behalf of minority stockholders of Garden State during the late 1970s. As a dissident member of the board, his independent efforts to block a merger he viewed as unfair to certain minority shareholders is often compared to the shareholder rights efforts undertaken in recent years by certain hedge funds.

Conway was born in Newark, but resided for much of his life in Chatham, New Jersey and Summit, New Jersey.Conway attended the Pingry School in Elizabeth, New Jersey but did not graduate due to a bout with rheumatic fever that sidelined him for several months.

Though Conway never finished high school, he started work as an errand boy on Wall Street and later began what turned out to be an illustrious banking career. Moving on to the Hudson County National Bank in Jersey City, New Jersey, Conway rose from an entry-level clerk position, ultimately becoming president of the bank, leading it through a period of technological change and mergers.

In the case of the 1978 proposed merger between Garden State and National State Bank of Elizabeth, Garden State's majority investor, Warner Communications, would have received a larger percentage of cash than the minority shareholders.

Originally supported by Warner Communications CEO Steve Ross (Time Warner CEO) and by Garden State's CEO, Charles A. Agemian, who was also on the board of Warner Communications, the transaction was ultimately defeated after Conway waged an independent effort via the Office of the Comptroller of the Currency which ultimately blocked the merger by placing conditions on the merger application that Agemian viewed as unrealistic.Following that failed transaction, Conway staged a successful proxy fight for a seat on the board of directors of Garden State. Garden State ultimately merged in 1980 with Fidelity Union Bancorporation of Newark (which later became part of Wachovia).

He died on March 31, 2006, aged 95.


Xerox Corporation (; also known as Xerox) is an American global corporation that sells print and digital document products and services in more than 160 countries. Xerox is headquartered in Norwalk, Connecticut (having moved from Stamford, Connecticut in October 2007), though its largest population of employees is based around Rochester, New York, the area in which the company was founded. The company purchased Affiliated Computer Services for $6.4 billion in early 2010. As a large developed company, it is consistently placed in the list of Fortune 500 companies.On December 31, 2016, Xerox separated its business process service operations into a new publicly traded company, Conduent. Xerox focuses on its document technology and document outsourcing business, and continues to trade on the NYSE. On January 31, 2018, Xerox announced that it would sell a controlling stake to Fujifilm, which has maintained a joint venture in the Asia-Pacific region known as Fuji Xerox.

Researchers at Xerox and its Palo Alto Research Center invented several important elements of personal computing, such as the desktop metaphor GUI, the computer mouse and desktop computing. These concepts were frowned upon by the then board of directors, who ordered the Xerox engineers to share them with Apple technicians. The concepts were adopted by Apple and later Microsoft. With the help of these innovations, Apple and Microsoft came to dominate the personal computing revolution of the 1980s, whereas Xerox was not a major player.

York Capital Management

York Capital Management is a global institutional investment management firm with approximately $20.5 billion in assets under management as of March 2018. The firm was founded in 1991 by Jamie Dinan.

York Capital is headquartered in New York City, with additional offices in London and Hong Kong. As of December 2012, York Capital was ranked as the 20th largest hedge fund in the world.In 2010, Credit Suisse acquired a 30% stake in York Capital for $425 million.

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