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Finance: What is Activist Investing? 11 Views
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Description:
What is Activist Investing? Activist investing is done with the goal of actually implementing change at a company by buying so many of its shares. By doing this, the investor can try to get a seat on the board or own such a big chunk of the company that they are able to influence decisions.
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Transcript
- 00:00
Finance allah shmoop what is activist investing Welshman gigi foot
- 00:08
massagers has been around forever great grandpappy elmo spanish for
- 00:14
the mo sold them to the u s army after
- 00:16
long marches through the r den in the first world
- 00:19
war Teo you know end all wars The soldiers then
Full Transcript
- 00:23
bought them when they got home and consumers followed suit
- 00:26
with company was so successful that it didn't need to
- 00:30
be all that efficiently run It went public in nineteen
- 00:33
sixty five and was a good stock for a while
- 00:36
Then in the early nineteen nineties the company didn't adapt
- 00:40
to the new world of internet distribution and robot manufacturer
- 00:44
so the stock languished It remained the same price in
- 00:48
nineteen ninety five that it was some two plus decades
- 00:51
later Well during that same period the overall stock market
- 00:54
went up almost five hundred percent and shmoop gigi's primary
- 00:58
competitors P eta terrible went up eight hundred percent stealing
- 01:02
loads of market share from schmidt ge whose product was
- 01:06
now ah define a ble inferior Well since this company
- 01:10
was public and largely now owned by the public the
- 01:14
public had the right to have a say in how
- 01:16
the company was managed Endless angry letters were sent to
- 01:20
the ceo elmo the fourth jr a direct descendant of
- 01:24
happy elmo the founder Those letters were ignored more letters
- 01:29
followed to the board and they were ignored as well
- 01:32
Then finally a set of activist investors decided it was
- 01:36
time to step in Ironically on comfortably massage feet courtesy
- 01:41
of shmoop gigi well the activist investors simply coalesced all
- 01:44
of the common stock shares they could find you know
- 01:48
identifying who owned him and said hey can you vote
- 01:50
with us And when the next board election came where
- 01:53
three of the eleven director seats were to be voted
- 01:57
on while the activist investors elected their own slate or
- 02:00
group of directors who would begin to force the company
- 02:04
to behave more like a shareholder friendly profit seeking company
- 02:08
instead of ah make work project for the progeny of
- 02:11
pappy elmo to simply take a salary and make tens
- 02:14
of thousands of sore feet relatively happy In fact the
- 02:18
activism here was pretty common in situations like this fat
- 02:22
companies who didn't streamline and adapt but who still had
- 02:25
pretty good brand names were out there And while there's
- 02:29
a whole qadri of lawyers who do little other than
- 02:31
chase companies earning twenty cents a share when they should
- 02:35
be earning a dollar a share for share holders like
- 02:38
that's who they work for shareholders Activist investing has become
- 02:41
so common that it is almost an industry or investment
- 02:45
category or strategy unto itself now and that's A good
- 02:48
thing because some of those fat cos well you know 00:02:51.66 --> [endTime] they could stand to lose a pound or two
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