Institutional Investors & Shareholder Activism in the USA

Published 9 January 2021

The various forms of shareholder activism and engagement

For institutional investors in the United States, shareholder activism and shareholder engagement are important aspects of owning shares in public companies. By engaging with companies they own shares in, investors can try to influence company policy to better reflect their investment beliefs and activism can be used to push for change at companies, when investors disagree with a company’s board over strategy or other business matters.

Shareholder activism can be split between economic activism and 14a-8 activism. Economic activism, as the term suggests, has the primary purpose of gaining a short-term economic reward. It is usually carried out by hedge funds and other professional investors who take a position in a target company and push for changes, which they believe will unlock shareholder value and earn them a good return on their investment. The most wellknown activist funds are led by the likes of Paul Singer at Elliott Management Corporation, Daniel Loeb at Third Point Management, Carl Icahn at Icahn Enterprises, or Edward Bramson. These investors typically take positions in companies they believe need corporate changes, such as mergers, acquisitions, or a break-up, to become more profitable. They can be aggressive corporate change agents, scrutinising their targets for sloppy decision making or wasteful excess and making use of the media to put pressure on their opponents.

Recent examples of high-profile shareholder activism campaigns include Bramson’s campaign against Barclays, Carl Icahn urging Hewlett Packard and Xerox to merge, or Elliott and another activist fund, Starboard, calling on Ebay to sell non-core assets. However, the global pandemic temporarily paused activist campaigns in 2020, as businesses concentrated on fighting for survival and activists decided to hold back until normality returned. The pandemic-induced crisis has also led to a temporary acceptance of ‘poison pills’, designed to halt hostile shareholder takeovers when company shares fell in price, due to the pandemic. But once the crisis abates, activist investors are expected to renew their campaigning.


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