I’m obviously not averse to some growth – well, if I can buy it bloody cheap, or free – but I don’t think anybody would dream of calling me a growth investor!? But you may be surprised to hear I don’t consider myself a classic value investor either. Ideally (at least in relation to some investments), I like to think of myself as an activist investor.
In this instance, let me hasten to re-define activist in the v broadest sense: Activist investing isn’t necessarily about public engagement with a company’s management – far from it, in many cases. I believe the essence of activist investing actually lies in the investment analysis & the investment itself – not the investor (as many would presume). An activist looks at a company and, on that rare occasion, sees a v different enterprise vs. the company (most) other investors currently see…
- Perhaps he sees a company that’s genuinely worth more dead than alive. Or one that would be far more valuable in the arms of a larger rival. Or a company that has a jewel in the crown that’s obscured by other/inferior divisions, central costs, etc.
- Maybe it’s a company that has under-utilized assets that can be sold to reduce/eliminate excessive debt. Or a company that could execute a recapitalization, and transform its financial metrics & shareholder value.
- Perhaps it’s simply misunderstood – investors may simply not grasp a company’s management/business/strategy have changed in a major way, or they under/over-estimate the potential impact (for example) of some litigation or regulatory action.
OK, if you’re a regular reader, all this may be ringing a bell… Yes, an activist investor sees a v different company to the one which currently exists (in the minds of most investors). That obviously implies a corporate transformation – andcatalysts are a great way to ensure that occurs. [Last year, I posted a complete 10-part series on catalysts - beginning here, ending here. I also published a recent summary, here & here]. Of course, in the absence or failure of other catalysts, an activist investor may simply choose to be the catalyst himself..!
The problem here is that nobody’s going to identify this different company for you – and catalysts aren’t always that obvious either. In fact, you’re really looking for something that basically isn’t there……
