2020 has been an unpredictable year filled with uncertainty and change. But one thing is for sure: activist investors will have their hands full this year. With the global economy looking unsteady and the stock market volatile, activist investors are ready to make their move and make a splash in the investors’ scene. In this article, we’ll explore the reasons why this could be a record-breaking year for activist investors. Read on to find out more and discover how these investors can make their mark.
1. Activist Investment: A Growing Trend
In recent years, activist investment has become increasingly popular among institutional investors in the financial world. This approach to investing involves a shareholder taking an active role in the management process of a company.
An activist investor can take a number of initiatives, such as pushing for business model changes, board membership changes and influencing financial decisions. Additionally, activists have been known to create alliances with other shareholders to increase their leverage. Investors usually look for companies with unrealized value that can be unlocked through their participation.
- An activist investor can push for changes in business models.
- Activists often join forces with other shareholders.
- The goal of an activist investor is to unlock unrealized value.
This investment strategy has become increasingly popular over the past decade, with an increasing number of investments taking place in recent years. Activist investors today manage over $200 billion of capital; a figure that shows the growing presence of activism in the markets.
2. The Benefits of Activist Investing
Activist investing has become a powerful tool for companies and investors alike. For companies, activist investing can open up new avenues of growth, strengthen boards of directors, and potentially unlock previously unseen value in the company. Meanwhile, investors can benefit from increased potential returns, potential dividends, and possibly even more corporate governance oversight. Here are some of the key benefits of activist investing.
- Stronger Growth: Activists can often bring a new and creative approach to a company’s issues and take it to the next level in terms of growth and profitability.
- More Value: Activists often have a better understanding of the potential latent value within a company and can unlock that value for investors.
- Better Governance: By having an active investor involved in a company’s decision-making, corporate governance regulations can be strengthened, protecting shareholders’ interests.
In addition, activists can also help boost the company’s stock price, which can be a huge benefit to shareholders, especially long-term investors. Furthermore, activist investors can be incredibly helpful in depressed or bear markets, where their focus on cost-cutting and efficiency can help the company weather the storms. Activist investing is an incredibly powerful tool, and has the potential to really change the game in terms of shareholders’ returns and company growth.
3. Reasons Why Activists are Gaining Ground
It’s an exciting time in the world for activists. With the rapid growth of technology and social media, activists have found new ways to spread their message. As a result, they are making an impact on local and global issues. Here are three .
- Voices are Being Amplified: The internet has given activists a megaphone to speak out against injustices or to share stories of those who lack a voice. This has enabled activists to quickly find and engage with people who share their message.
- People are Engaging: People are becoming more aware and engaged in activism. With the help of social media, activists have been able to turn everyday citizens into allies in their cause.
- Governments are Listening: Governments around the world are finally starting to pay attention to the actions of activists. In many cases, they are establishing policies and making changes to laws in order to address the issues raised by activists.
It’s clear that activists are having an impact on the world. Citizens, corporations, and governments are being moved to action by their efforts. As technology and social media evolve, it is likely that activism will continue to gain ground. We can only hope that positive change results from this increased presence of activism in our world.
4. What the Year Ahead Holds for Activist Investing
2020 has been an unconventional year, and the world of activism has proven to be no exception. Despite the difficult conditions, activist funds have demonstrated strong returns, with major wins for long-term values. As 2021 approaches, the outlook for activist investing is promising, with a number of factors set to shape the industry over the coming year.
What should we expect in terms of the future of activism? Here’s a few predictions that should have investors excited.
- Sustainability: More and more activist funds are dedicated to driving sustainable outcomes – particularly with regards to climate change – paving the way for greener investment portfolios.
- AI-driven strategies: As AI-powers platforms become more prevalent, investors will have access to detailed data-driven analysis, allowing for smarter activism decisions.
- More collaboration: Activists from all over the world are collaborating to identify issues, develop solutions and achieve activist objectives.
The key takeaway here is that 2021 is set to be a game-changing year for activists. With new technology, collaborations and strategies being forged, who knows where the venture might lead.
The dynamic nature of activist investors is expected to continue in the new year. With an ever-changing landscape, activism will remain a powerful tool for long-term investors, as well as providing short-term performance uplifts. From the pursuit of strategic transformation to gaining leverage in public markets, activist investors will be key for those businesses looking to take advantage of the current environment. So, as the new year drives us ever forward, be sure to keep a keen eye out on the ‘activist calendar’ to see where the money might be heading.