Activist Investors: What Can You Gain And Lose By Following Them?
Performance of activist investorsTracking the performance of activist investors is difficult, but many academic studies point to outperformance. For example, IRRC Institute's 2009 study of 120 companies - in which activist investors gained board seats during 2005 to 2008 - found that total shareholder returns were 19.1% to 16.6% higher than peers during a one-year period beginning from the proxy contest. Morgan Joseph & Co. tracked 94 campaigns over an 18-month period during 2005 to 2006, and found that excess returns for these stocks were 16% in the year following the first announcement of an activist shareholder's involvement. Other studies also report similarly positive results.
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