Activist investor
An activist investor is an investor, often a , that buys a meaningful stake in a public company specifically to pressure management or the board into making changes. That is different from a typical , who buys expecting the existing team to run the business well and simply holds or sells based on how it performs.
The changes an activist investor pushes for usually fall into a few categories: replacing the CEO or other executives, adding new directors to the board, changing how the company allocates capital, such as buying back more or selling off a division, or pursuing a merger or breakup. Because the stake is often large enough to matter, and because the fund is willing to campaign publicly for what it wants, a company can be forced to respond even if management disagrees with the demands.
Activist involvement is a signal to weigh, not a guarantee of anything. It usually means an outside party with real financial incentive has concluded the company is undervalued or mismanaged in a fixable way, but the changes an activist pushes for do not always work, and a public fight between an activist and a company's existing leadership can itself create uncertainty that weighs on the in the short term.