Should we embrace the shareholder activists?

Activist investors have made the headlines recently, but what do activists do? And are they a help or hindrance in the long run? Piper Terrett investigates.

Shareholder activistshave been in the headlines frequently over the past few months as a result of a number of high-profile shareholder campaigns around the world. UK investment trust Alliance Trust, Japanese robotics firm Fanuc and Korean conglomerate Samsung are among those that have come under attack from predominantly American investors, such as Elliott Associates and Third Point.But what do activists do and are they a help or hindrance over the long run?

Activist investors are typically private-equity groups, hedge-fund managers and very wealthy individuals with the clout and connections. The best-known activist investors, such as billionaire Carl Icahn, are almost exclusively from America, reflecting the fact that the US market has traditionally been far more conducive to shareholder activism.

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Piper Terrett is a financial journalist and author. Piper graduated from Newnham College, Cambridge, in 1997 and worked for Germaine Greer and for Adam Faith’s Money Channel before embarking on a career in business journalism. 

She has worked for most top financial titles, including Investors Chronicle, Shares magazine, Yahoo! Finance and MSN Money. She lectures part-time at London Metropolitan University and is the author of four books.