Activist Investor

AAA

DEFINITION of 'Activist Investor '

An individual or group that purchases large numbers of a public company's shares and/or tries to obtain seats on the company's board with the goal of effecting a major change in the company. A company can become a target for activist investors if it is mismanaged, has excessive costs, could be run more profitably as a private company or has another problem that the activist investor believes it can fix to make the company more valuable.

INVESTOPEDIA EXPLAINS 'Activist Investor '

Private equity firms, hedge funds and wealthy individuals are types of entities that might decide to act as activist investors. One well-known activist investor is Carl Icahn. He has attempted to make major changes at Yahoo!, Blockbuster, Time Warner and RJR Nabisco, among other companies. Other big-name activist investors include Kirk Kerkorian, Bill Ackman, Eddie Lampert and Nelson Peltz.

One indication that a company may have become a target for activist investors is the filing of SEC Form 13D, which must be filed when an investor purchases 5% or more of a company's shares.

RELATED TERMS
  1. Corporate Raider

    An investor who buys a large number of shares in a corporation ...
  2. White Knight

    A white knight is an individual or company that acquires a corporation ...
  3. Yellow Knight

    A company that was once making a takeover attempt but ends up ...
  4. Black Knight

    A company that makes a hostile takeover offer for a target company. ...
  5. Schedule 13D

    A form that must be filed with the SEC under Rule 13D. The form ...
  6. Shareholder Activist

    A person who attempts to use his or her rights as a shareholder ...
RELATED FAQS
  1. What's the difference between Google's GOOG and GOOGL stock tickers?

    The difference between Google's GOOG and GOOGL stock tickers is that GOOG shares have no voting rights while GOOGL shares ... Read Full Answer >>
  2. How can investors influence the c-suite?

    Investors in publicly traded firms can influence C-suite executives by exercising voting rights or engaging in investor activism. ... Read Full Answer >>
  3. What is the significance of a Schedule 13D?

    A Schedule 13D is significant because it provides investors with useful information about majority ownership in the company. ... Read Full Answer >>
  4. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  5. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  6. What percentage of a diversified portfolio should large cap stocks comprise?

    The percentage of a diversified investment portfolio that should consist of large-cap stocks depends on an individual investor's ... Read Full Answer >>
Related Articles
  1. Investing Basics

    SEC Filings: Forms You Need To Know

    The forms companies are required to file provide a clear view of their histories and progress.
  2. Mutual Funds & ETFs

    Activist Hedge Funds: Follow The Trail To Profit

    Learn to profit by following the lead of some of Wall Street's most ruthless investors.
  3. Options & Futures

    Activist Investors: A Good Or Bad Thing?

    When a large stakeholder is dissatisfied with a company's management, it may take matters into its own hands.
  4. Investing

    Nasty Shareholder Activist Battles And Why They Happened

    Shareholder activists can have a big impact on a company's operations. These battles turned ugly as management lost control.
  5. Options & Futures

    Keeping An Eye On The Activities Of Insiders And Institutions

    These transactions reveal much about a stock. We go over what to consider and where to find it.
  6. Investing

    Digging In To 13D Disclosures

    This document can provide important clues about a company and its stock.
  7. Investing Basics

    Understanding Total Return Swaps

    A total return swap is a contract in which a payer and receiver exchange the credit risk and market risk of an underlying asset.
  8. Investing Basics

    Explaining Assets Under Management

    Assets under management is a metric that measures the market value of assets that an investment company manages for investors.
  9. Investing Basics

    Explaining Absolute Return

    Absolute return refers to an asset’s total return over a set period of time. It’s usually applied to stocks, mutual funds or hedge funds.
  10. Active Trading Fundamentals

    Five Biggest Obstacles Facing First-Year Traders

    Address these five obstacles and you'll make significant progress as a first-year trader.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!