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What's the deal with the "Activist investor" that is forcing these changes? Is this a common thing in the investment world? Does anyone have deeper insight into

What's the deal with the "Activist investor" that is forcing these changes? Is this a common thing in the investment world? Does anyone have deeper insight into this?

charlesdm 9y ago
Yahoo is a basic example of activist investing. Activist investors try to increase shareholder value in the companies they invest in, in any way possible, to achieve above average returns for their investors. If that means burning down the house (e.g. selling a company in bits and pieces, or pushing certain strategic changes) then they will. Apple has plenty of cash on their books. If an activist shareholder could somehow force them to spend all that cash on buybacks (-> significant share price increase), they can make a nice buck that way. That's actually what Carl Icahn did, over the last few years.
- bpodgursky 9y ago
  Yahoo was a bloated carcass by the time activist investors got involved. Cutting the fat, selling off parts, and returning some value to investors was the only fair outcome.
  - adrr 9y ago
    Yahoo stock price went up 400% in 5 years. Investors made out quite well.
    - gaius 9y ago
      ... almost entirely off their stake in BABA. YHOO was effectively just an ETF invested in just one stock, their actual business had negative value.
      - charlesdm 9y ago
        Meaning it was a good activist play? It was trading negatively because there was a chance Yahoo management would sell that BABA stake, and use that money to fund their operating business.
kylebgorman 9y ago
Activist investors who want changes in business model or cost are extremely common. Just about every publicly traded company has to deal with one at some point.
lmm 9y ago
It's a common thing. Simplifying you have passive investors who will try to invest in companies that are well managed and leave them to it and activist investors who will look for companies that are badly managed (and thus cheaper than they "should" be) and then pressure them to make changes.

What's the deal with the "Activist investor" that is forcing these changes? Is this a common thing in the investment world? Does anyone have deeper insight into this?

charlesdm 9y ago

Yahoo is a basic example of activist investing. Activist investors try to increase shareholder value in the companies they invest in, in any way possible, to achieve above average returns for their investors. If that means burning down the house (e.g. selling a company in bits and pieces, or pushing certain strategic changes) then they will. Apple has plenty of cash on their books. If an activist shareholder could somehow force them to spend all that cash on buybacks (-> significant share price increase), they can make a nice buck that way. That's actually what Carl Icahn did, over the last few years.

bpodgursky 9y ago
Yahoo was a bloated carcass by the time activist investors got involved. Cutting the fat, selling off parts, and returning some value to investors was the only fair outcome.
- adrr 9y ago
  Yahoo stock price went up 400% in 5 years. Investors made out quite well.
  - gaius 9y ago
    ... almost entirely off their stake in BABA. YHOO was effectively just an ETF invested in just one stock, their actual business had negative value.
    - charlesdm 9y ago
      Meaning it was a good activist play? It was trading negatively because there was a chance Yahoo management would sell that BABA stake, and use that money to fund their operating business.

kylebgorman 9y ago

Activist investors who want changes in business model or cost are extremely common. Just about every publicly traded company has to deal with one at some point.

lmm 9y ago

It's a common thing. Simplifying you have passive investors who will try to invest in companies that are well managed and leave them to it and activist investors who will look for companies that are badly managed (and thus cheaper than they "should" be) and then pressure them to make changes.