The definition of ‘investor’
Investor is an investor who holds most of the company’s shares and takes an active part in the management. The investor can also be called by the majority shareholder, and the shareholder activist. Practical investors use their ownership stake in the firm, actively involved in the decision-making of the company and try to change how the company operates.
Breaking down the ‘investor’
The investor may be a large shareholder who is also actively involved in how the company is managed. This can be done by voting, electing members of the Board of Directors or direct interaction with the management of the company.
The majority shareholders are usually hands-on investors and have a major impact on the management decisions of the company. This may or may not lead to tension with company managers, who usually prefer not to go on one of the shareholders, especially when such shareholders do not have the same experience, no business acumen as a management company.
Hands-on investors and investors-activist
Large asset managers like blackrock and fidelity hold enough shares of the company at the expense of their funds figure to engage them in the hands of investors, however, they usually choose not. Large pension funds like the pension system of civil servants of the state of California or new York Common Retirement Fund, is sufficient to hold the stock in their portfolios of stocks and sometimes trying to contact the administration directly or through proxy voting.
Some companies, including active management of the investment and some hedge funds and private equity funds, defined as activist investors.
The shareholder activist is a shareholder who uses the stake in a Corporation to exert pressure on his leadership. Target shareholders financial (increase of shareholder value through changes in corporate policy, financing structure, reduced costs, etc.) to non-financial (investment holding in selected countries, adoption of environmentally and socially friendly policies, etc.).
A rather small stake of less than 10% of the shares, may be enough to run a successful campaign. For comparison, a full takeover offer is much more expensive and difficult. Some investors who regularly act as activist investors include Management Icahn, relational investors and Pershing square capital Management.
Many hands-on or activist investors often believe that they are unlocking the hidden value in the companies that they pursue. One recent example is the interaction of the right values in 2014, Darden restaurants, the parent company of olive garden. In a now famous 300-page report presented in the media, right Jeff Smith pilloried at olive garden for giving too many breadsticks to visitors and not salting the pasta water.
Other hands-on investors such as the Interfaith Center for corporate responsibility (ICCR), as you sow and Ceres, use resolutions of shareholders, and other means of pressure to address issues such as sustainable development and human rights.