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"Activist" typically refers to investors who try to either obtain enough shares, or sway the votes of enough shares, to get seats on a company's board and enact
by ubernostrum 11y ago
"Activist" typically refers to investors who try to either obtain enough shares, or sway the votes of enough shares, to get seats on a company's board and enact a specific agenda they want. It's often used pejoratively to refer to investors who want to gain influence just long enough to reap a profit from gutting the company, leaving other investors with now-worthless shares in the husk they leave behind.
- WalterBright 11y agoSometimes a company's parts are worth more than the company, and "parting it out" like one would an old car is the right thing to do.
- chrisbennet 11y agoUnfortunately for the employees, they aren't considered in the calculus of "value".
- WalterBright 11y agoAre you sure? Many companies and divisions are bought by other companies to get the employees, dubbed an "aquihire". This happens when the employees are worth more than the book assets.
- jacquesm 11y agoAnother tactic is to split the company into a profitable and a non-profitable portion and then let the non-profitable portion preferably loaded up with a bunch of debt sink. This ought to be illegal but it's a recurring pattern.
- talmand 11y agoDepends on whether the company's parts are worth more than the company now versus the future of the company. Someone looking to make a quick buck probably doesn't care that a long term strategy would net much more money over time than a quick sale. Such that, why wait ten years for ten million dollars when one can have two million dollars now? Totally depends on the company, much like your car analogy, and it may not be the right thing to do. But I suppose what the right thing to do may depend on the person you ask.
- WalterBright 11y ago2m into 10m in 10 years is a 17% annual return, pretty darned attractive. A company with such prospects is worth much more than 2m selling to someone else.
- talmand 11y agoThat's completely true, and my point. It's just that some people don't agree with that train of logic, they want the quick cash now.
- WalterBright 11y agoPeople with that kind of money tend to have financial good sense. Even if you don't want to wait 10 years, for 17% returns you can sell it today for much more than $2m to someone who will.