Investment usually involves committing your funds to a specific vehicle like stocks to turn a profit. Investors are very hands-off and simply monitor changes in their investments. Activist investment, however, is very far from that investment model.
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The goal of activist investment is toward a general improvement in the well-being of people or the environment. This may sound like a sweeping statement, but the methods activist investors use are quite unique to achieve this goal.
Activist investors buy a significant amount of shares from a company, enough for them to become major stakeholders. And once they have enough influence on the company, they then introduce changes that they would want to reflect on the company. One of the steps they take after purchasing enough shares is to become part of the board or to remove people who are not willing to comply with the changes they want to see.
These changes vary widely. They can influence the salary margin between males and females, change company policies, introduce changes in the supply chain, push for more sustainable efforts from the company, and many more. Some activist investors simply introduce new ideas to the company after gaining influence, ideas that they see could generate value for both themselves and the company.
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Jon McKeeQueen is an expert manager, trader, and investor currently working with private equity firm Amatex Capital, which was founded in 2015 with the goal to explore unique investment and arbitrage opportunities in Ukraine. Jon specializes in project development, company management, corporate finance transactions and fundraisings, commodity trading, and risk quantification. For more articles on activist investing, visit this blog.
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