Activist Investors: Corporate Raiders Or Bounty Hunters In Suits
- David Abam
- Jul 4
- 22 min read
Picture this: you are an embattled Disney CEO, leaving the December 2022 board meeting in which, one, your stock is down 43.65%, two, you have to lay off another 400 people, three, after initial reviews of Ant-Man Quantumania are abysmal but has to air as is because it is so over budget. Then you meet your first assistant, who tells you that THE Nelson Peltz has set his sights on you by acquiring a significant stake in your company, Disney in addition to some damning tweets directed at you. Who is Nelson Peltz? Your intern attaché asks. “Nelson Peltz,” you say, with a faint croak in your voice, “is a hedge fund manager (with $7 billion in Assets Under Management), and worst of all Activist Investor.” “So he is here for activist reasons, such as reducing our carbon emissions, increasing our ESG goals, that sort of thing?” He asks. “The only activism that those guys do is actively strong-arm you into artificially inflating your share price; they don’t care if they break the business, they squeeze until you cave or buy back their share at what can only be classified as extortion.”
In today’s piece, as promised last week, we will be taking a look at the world of Activist Investors. They are Wall Street’s rogue agents, forcing change through sheer financial intimidation. But are they catalysts for growth or just corporate raiders in suits? I would be exploring that by first defining who they are, what they do. I will then elaborate on their playbook, giving examples on the deviousness and dirtiness of their tactics, showing real-world impacts of their actions. This dirtiness and real-world impact would solidify my point that these are the closest things to corporate thugs. If you thought the Bond Vigilantes in the last piece were modern-day sheriffs, these activist investors are plain bounty hunters. I will then give examples of when two activist investors on opposite sides battled it out. I would then give examples of what can be done by management and the board to fight back against an activist investor. I will then introduce a different variation of activism that came about, more truth-seeking than personal benefits, that was actively taken by a Research firm turned hedge fund, Hindenburg Research, and how they exposed vast amounts of fraud while profiting from it.
Who are Activist Investors
Unlike you and I, who may buy a few shares, Activist investors aren’t just passive shareholders hoping for dividends and modest returns. Most activist investors work for a hedge fund. They typically acquire a significant, but not necessarily controlling (10%) stake in a public company and then push management to make strategic, financial, or governance changes. With the sole aim of boosting shareholder value, that is, finance bro speak for “short-term increase of the share price.” These changes include: Pushing for board seats, demanding cost cuts (typically starting with layoffs) or asset sales, forcing out CEOs, advocating for spin-offs or breakups, campaigning for dividends or share buybacks, or even forcing the company to declare bankruptcy. To them, they believe the company is being mismanaged, and they are acting at the behest of the shareholders, trying to do what’s best for the shareholders.
They are also called shareholder activists, and while there isn't one single individual definitively credited with coining the term "activist investor," the practice of shareholder activism, and the term itself, gained prominence in the 1980s and 1990s, particularly through figures like Carl Icahn. In 2025, there are many prominent shareholder activists, some of whom are known by the name of the hedge fund itself, as seen in Elliot Investment Management, while others are known by the individual, such as Bill Ackman of Pershing Square. Below is a graph of the top 10 activist hedge funds per the Sovereign Wealth Fund Institute
The Activist’s Playbook:
With mirrors to private equity and other tactics, including one better suited for the public markets. These include:
Stake-building: As discussed, the fund acquires a significant stake in the publicly traded company, typically around. 5-10%, and often announce their campaigns by filing a Schedule 13D form with the U.S. Securities and Exchange Commission (SEC), which must be filed within 10 calendar days of acquiring 5% or more of a company's voting class shares. This isn’t enough to push a shareholder vote in their favour, but it is usually enough for one or more board seats.
Targeted Messaging: This is usually via a press release, white paper, investment thesis, or, if you’re Bill Ackman, via tweets. The initial 13D filing gives the activist investor a golden opportunity to publicise their case for change at the targeted company. This messaging is aimed directly at leadership and the board of directors. In such messaging, the firm indicates the size of the stake acquired, its desire to be appointed to a board seat or in some cases a formal request of one or more board seats, the weaknesses that it has identified and a brief explanation on why their solution to this problem would mean an increase in the share price. This messaging is a two-sided sword, the first edge directed to undermine and make management look incompetent to the wider public, and the second edge is to reinforce such an incompetent look to garner the votes of other larger shareholders to effect all kinds of change.
Operational Restructuring: When a board seat is given, they then push for major restructuring plans that include a reduction in staff headcount, sometimes laying off entire departments, a reduction in benefits, bonuses, and pay rises. This then includes a major reduction in salaries and benefits of management and the board. They then deploy tactics of the finance bros over at private equity with a push for operational efficiency; they close down departments, spin off or divest underperforming divisions and even a change in strategic direction, such as telling a company to adjust its ESG, environmental, or cultural goals, such as scrapping DEI initiatives. This can also include a complete overhaul of their systems and often a reduction of quality standards.
Financial Engineering: They also adjust the company's financial direction to suit them best. This can vary, as some investors force the company to break ties with suppliers and switch to suppliers that are controlled or owned by the hedge fund. This can also be such that they convince the board to use leverage (debt) to repurchase its own shares, which are known as share buybacks. This artificially inflates the price of investors' shares temporarily. On paper, this might sound good, and in the short term, it is good for all investors. In the long run, however, this can become problematic as it takes away the company’s ability to invest when and where needed in future technology rather than just doing buybacks, nor does it provide financial protection in the situation of a macroeconomic downturn. The activist can also then hold management hostage forcing them to purchase the activist shares for a healthy premium.
Governance Overhaul: An activist may request a change in the members of the board, requesting the removal of some and suggesting the installation of others. While on the board, they may choose to oust the entire management team, including, at worst, replacing the board with their recommended people. Such overhauls would include the replacement of the CFO, COO, CIO, and even CEO, the President and Chairman of the Board may also be voted off the board. When replaced with those the activist investor nominates, they effectively do the bidding of the activist investor. As seen in the open letter of Dan Loeb (CEO & CIO of Third Point) wrote
“Board Refresh: Disney is a world-class company that deserves a world-class board of directors who possess diverse talents and experience with strengths in technology, advertising, and consumer engagement, as well as proven track records of leading large complex organizations and creating shareholder value. This is not meant to single out any current board members, but we believe there are gaps in talent and experience as a group that must be addressed. Third Point has identified potential board members who we believe would make essential contributions to the Company’s Board at this critical time. We would be happy to make an introduction.”
What makes activists particularly effective or dangerous, depending on your view, is their ability to sway public opinion. Armed with spreadsheets, PowerPoint decks, slick investor presentations, and often aggressive media campaigns, they rally other shareholders behind their cause. Sometimes, that means going to war in full view of the markets.
Activist Investor vs BigCo
Nelson Peltz (Trian Partners) vs Disney:
One of the most high-profile activist campaigns in recent memory, Nelson Peltz’s Trian took aim at Disney’s faltering financial performance and strategic missteps under Bob Chapek and Bob Iger. Contrary to popular media reports, Nelson Peltz did not lose his proxy contest with Disney. While it is true that he and his affiliated candidate did not win the election to the Disney board, his real impact on the company was significant and, in that respect, he ultimately won the war. First, he received a reasonably significant percentage of the votes cast. While not enough to gain a board seat, it was significant enough to send a strong message to Iger and the Disney board. A large dissenting vote is never healthy for the company. While Peltz may not have gained a board seat, there are still a large number of unhappy shareholders that Iger must face. Second, his fight resulted in some positive board refreshment. The addition to the board of an independent James Gorman from Morgan Stanley was certainly a positive development. This probably would not have occurred without the Peltz threat. Finally, the fight forced a reexamination of the Disney strategy, which well may not have taken place but for outside pressure. This battle also cost 7000 people their jobs as the company was aiming to save $5.5 billion. Even though he did not win the proxy fight with Bob Iger, he did walk away with $1 billion in profit on a $3.5 billion stake. This is a simplified version of what occurred in the 2 years of the proxy battle. If you’re interested in the entire proxy war, you can read it here.
Elliott Investment Management vs Southwest Airlines
In June of 2024, Elliott Investment Management (Elliott) revealed that it held a $1.9 billion stake in Southwest Airlines (Southwest), which at the time was about 11% of the company. They were seeking to immediately replace the CEO, Bob Jordan, and the Chairman of the Board, Gary Kelly, with outside candidates. Believing there was an Opportunity for a turnaround of the company, given that since 2020, the share price had been halved. Publishing a plan for changes in leadership. Elliott’s stake was large enough to call a special shareholders’ meeting to enact said changes. That July, Southwest started announcing operational changes such as the inclusion of new premium seating. By October, Southwest agreed to a settlement with Elliott, which included replacing six board members, five of whom Elliott had handpicked. This year, the firm forced the company to end a 50-year policy, free checked bags. This policy is really what sets Southwest apart from other low-cost airlines. Internally, Southwest’s worker-first culture was also taking a beating as Elliott conducted the first mass layoff in the airline's 54-year history, slashing over 1750 jobs. This is still an ongoing situation; however, it seems to be paying off because, in June of 2024, Southwest Airlines' share price was around $26.59, and as of the time of writing, it is around $34. This means that Elliott is looking at ~28% returns or $529.5 million in profits if they did nothing else but strategically sell their stake.
Elliott, in particular, has taken activist stakes in many household names, such as in 2020, when they took a significant stake in Twitter and pushed for then-CEO Jack Dorsey to step down, criticizing his split attention between Twitter and Square. A deal was brokered, board changes were made, and Dorsey eventually resigned. Elliott also took a multibillion-dollar stake in Salesforce and demanded accountability amid Salesforce’s slowing growth. Facing a potential proxy battle, the tech giant responded with mass layoffs and board changes. Elliott backed off, but the message was clear: no one is untouchable.
The Pros and Cons of The Continued Existence of Activist Investors
Setting my personal biases aside, I do believe that there is a need for the notion of shareholder activism and, therefore, a need for activist investors. I concede that the complete doing away with activist investors is akin to throwing away the baby with the bathwater. As such, I will outline 4 benefits that shareholder activism brings and then appropriately state my stance on these bounty hunters.
They Get Attention: An investor who owns a few hundred or even a few thousand shares doesn't have much pull with management. Activist investors purchase (or short) a large enough percentage of a company's shares to demand and get attention. They also get a fair amount of media attention and use it to air their grievances. The company's management and its board can't ignore an activist. Activists have the power to hold management's feet to the fire and demand results. They will work hard to enhance stakeholder value. This also brings attention to the company by the wider media.
New Faces Mean New Ideas: Activist investors may have sound ideas about how management can use the company's assets better, improve its operations, or enhance shareholder value. Management may or may not be receptive to such ideas. However, the dialogue could be productive of positive changes for the individual investor as well as the activist. This removes management from the echo chamber that they might be unknowingly placed within. Ensuring that those who are out of touch are out of work.
Demand for the Shares Could Rise: Activists tend to snap up a big percentage of a company's outstanding stock over a short period of time. Others will jump on the bandwagon in hopes of turning a tidy profit. Furthermore, pushing for even bigger share buybacks, I assume that some stocks may even increase more if the activist investor is well known for requesting an increased share buyback programme. This will push the stock price up and, by extension, benefit all common shareholders in the short run, “rising tides floating all boats” situation.
They Usually Get Results: For all their faults, they typically do get results. Activists usually have very specific demands. As an example, in 2006, Trian Partners pushed for fast-food chain Wendy's to spin off its Tim Hortons donut business to increase value.1 Some shareholders bought into the idea, and the board agreed. The spin-off allowed Wendy's to focus more on its core business and on competing with its rivals, including Burger King and McDonald’s.
All in all, supporters see activists as crucial checks on managerial complacency. They bring accountability to the C-suite, especially in companies that might otherwise coast with bloated spending and poor governance
My Take: as much as I can concede to the intellectual soundness of these arguments, I still strongly posit that their continued existence is only a net negative to the consumer experience, but an inverse effect occurs on the share price in the long term, especially to the type of investor that I am. I need to explain the sort of investor I am, which puts me in a particularly niche group, which gives me a peculiar perspective that I take into my portfolio. In running this newsletter, I am constantly informed about economic and political events that affect different companies and industries, allowing me to read and research like a day trader; however, I only purchase shares once a month, and I purchase shares to hold for a minimum of 5 years at this point. Even though I recommend, for everyone else who asks me, to invest in ETFs and other index funds, I choose individual stocks once a month, following the prior month’s research using various investing strategies. In simple terms, I research daily and make investment thesis as if I am a day trader, but my risk appetite permits me to invest once a month in individual stocks to be held for a minimum of 5 years. The reason why I do not agree with activists is that their investment correlates directly with the decline in the customer experience and a subsequent increase in the prices for all customers, they, cut spending in customer facing areas ensuring that if it doesn’t generate money it costs a lot less, this is eerily similar to the world of Private Equity. .In short, it's important to note that activists may have a very different investment horizon from the average investor. And, they may be far more willing and able to accept a loss on their bets.
A research paper titled, THE LONG-TERM EFFECTS OF HEDGE FUND ACTIVISM, by the National Bureau of Economic Research NBER which looked at over 2000 activist interventions in order to test the empirical validity of the claim that interventions by activist hedge funds have a negative effect on the long-term shareholder value and corporate performance. They found “no evidence that activist interventions, including the investment-limiting and adversarial interventions that are most resisted and criticized, are followed by short-term gains in performance that come at the expense of long-term performance.” They also found “no evidence that the initial positive stock-price spike accompanying activist interventions tends to be followed by negative abnormal returns in the long term; to the contrary, the evidence is consistent with the initial spike reflecting correctly the intervention’s long-term consequences.” Translating that from PhD PhD-level research paper to regular conversation, their research found that the changes requested by activist investors end up leading to a better-managed and more profitable company in the long term. They also found that when exited, there were no negative abnormal returns in the long term, which makes the case for the continued existence of the activist investor. My question is at what cost to quality, culture, and the end customer experience?
Other dissenting opinions of note;
Activists Look Out for Themselves: They try to convince other shareholders and the media to buy into their agenda, but at the end of the day, they are looking out primarily for their own best interests. It would be wise for investors, big and small, to keep this possibility in mind when listening to an activist.
Activists Aren't Always Right: Many perceive activists as being smarter than the average investor. They have extensive experience, important industry contacts, and access to solid research. However, activists aren't always right. Their timing can be off, and they can and do sometimes lose money. At other times, their good ideas can take an extraordinarily long time to pan out. They can afford to wait it out. Investors should keep this in mind when tempted to copy an activist's buying or selling action. Michael Burry, the “Big Short” investor who became famous for correctly predicting the epic collapse of the housing market in 2008, made headlines recently when, in his most recent filing dumped his entire stock portfolio except for one - Estee Lauder $EL. There was this humorous quote that drove this point home by Barchart on Twitter
“Michael Burry, the man who has predicted 20 of the last 2 market sell-offs, dumped his entire stock portfolio except for one - Estee Lauder $EL.
Activist Investor vs Activist Investor
Carl Icahn vs Bill Ackman
This is a clash of Wall Street titans; Bill Ackman, the brash, self-righteous hedge fund manager, versus Carl Icahn, the battle-hardened veteran. Their rivalry centers around Herbalife, a controversial multi-level marketing company selling weight-loss products. Ackman took a massive short position, betting against Herbalife while framing it as a moral crusade against a "pyramid scheme." Icahn, ever the opportunist, saw it differently.
Ackman started his career with Gotham Partners, a hedge fund he launched in his 20s. Early success turned to disaster when a bad investment forced its closure. But one deal lingered—a real estate investment where Icahn bought Ackman’s shares, only to later stiff him on a promised profit split. Ackman sued and won, but Icahn never forgave him for gloating publicly.
Icahn is Wall Street royalty, a ruthless investor who built his fortune by taking big stakes in undervalued companies and forcing change. His playbook includes hostile takeovers, proxy fights, and pressuring management. He doesn’t just bet on stocks; he bends them to his will. When Ackman shorted Herbalife, Icahn smelled blood but not for the same reasons.
Founded in 1980, Herbalife grew into a multi-billion-dollar MLM empire. Critics argue its model is a pyramid scheme where distributors earn more from recruiting than selling products. Ackman claimed it would collapse under scrutiny, but Herbalife denied wrongdoing, and its stock kept climbing.
In 2013, Ackman and Icahn clashed live on air. Icahn called Ackman a "liar" and said he’d "never invest with him." Ackman shot back, calling Icahn untrustworthy. The feud escalated as Icahn took the opposite trade, buying Herbalife stock, betting against Ackman’s short.
For years, the two billionaires duelled over Herbalife. Ackman insisted it was doomed; Icahn kept buying. By 2018, Icahn had made over $1 billion, while Ackman finally admitted defeat and closed his short. Herbalife’s stock had doubled since Ackman’s initial bet.
Despite the vicious public feud, the two eventually made peace, even sharing a hug at a conference. Icahn walked away richer; Ackman moved on. The battle proved Icahn’s instincts were sharper, but it also showed how personal Wall Street rivalries can get.
The Herbalife war wasn’t just about money; it was about ego, strategy, and Wall Street’s unwritten rules. Ackman played the moralizer and lost; Icahn played the opportunist and won. In the end, the market decided: Herbalife survived, and activism, whether short or long, remains a high-stakes game.
What can a Board of Directors do when facing Activist Investors?
Shareholder activism should encourage boards to step up their investor engagement oversight efforts, recognizing that different boards and different directors will take different approaches. For example, some obtain updates from their investor relations teams at every board meeting, while others do so once a year. In some cases, directors even meet directly with investors. Yet very few omit shareholder engagement from the board agenda, and those that do act at their peril.
When authorizing corporate actions, the board should consider the views and priorities of key shareholders and shareholder segments. For example, if the company is going to undertake a share repurchase program in lieu of reinvesting that capital in the company, the board should consider the potential effects of that decision on shareholders. Decisions that involve either raising or allocating capital always warrant close scrutiny and an understanding of shareholders’ views and expectations.
As such the board should:
Exercise strong risk oversight and organizational governance.
Monitor the company’s shareholders and their goals. Through surveys, discussions with management, and external perspectives.
Ensure that the company’s investor relations team performs well.
Request an activist vulnerability assessment. This kind of assessment not only helps the company prepare for an activist event, but also identifies opportunities to lower the organization’s vulnerability to such an event.
Review management’s activist-campaign response plan.
These are preventative measures that the board can take prior to a duel with an activist investor, however, there are reactionary or responsive measures, concepts that could be borrowed from other parts of business and high finance.
The Poison Pill Defence:
A poison pill is a defence strategy that a board of directors may use to try to keep control when a public company experiences an unwelcome takeover bid from activist investors, competitors, or others intent on an acquisition. The most common poison pill is the flip-in, which involves issuing more shares to shareholders, excluding the entity angling for control. Often called a shareholder rights plan, it is meant to frustrate creeping acquisitions of control, in which the acquirer seeks to accumulate a controlling or dominant stake without negotiating with the board or offering the same deal to every shareholder.
The Crown Jewels Defence:
The crown jewel defense is a strategy used by a company facing a hostile takeover to make itself less attractive to the acquirer. This involves selling off its most valuable assets, or "crown jewels," to a friendly third party, thereby reducing the target company's overall value and appeal to the hostile bidder. The goal is to deter the takeover attempt by making the acquisition less desirable or financially viable. Crown jewels refer to the most valuable unit(s) of a corporation as defined by characteristics such as profitability, asset value, and future prospects. This could be the line of business that produces the most popular item that a company sells, or perhaps the department that holds all of the intellectual property for a project that is thought to be of great value in the future once it is finished. The sale of the crown jewels of a company is often a drastic attempt to ward off a hostile takeover or relieve the severe financial stress of a debt burden. In either case, a company's best operating assets are sold, essentially changing the entire nature of the company and leaving it with a different set of growth prospects and shareholder support.
The Scorched Earth Defence:
Scorched earth is a self-tender offer by the target that burdens itself with debt. Consequently, nobody (even a hostile acquirer) wants to buy heavy loads of debt. It is a defence of last resort. This means that the company would take out debt to outbid the activist's own offer to buy their shares, but that debt sits on the company’s balance sheet.
A Different Type of Activist Investing: Hindenburg Research
It is crucial to explain one more finance concept before moving ahead, which is the concept of short selling or “shorting” stocks. Short selling is a trading strategy in which a trader aims to profit from a decline in a security's price by borrowing shares and selling them, hoping the stock price will then fall, enabling them to purchase the shares back for less money. Picture this: you have 1000 shares of Apple at $100 per share, a short seller borrows your shares for a month, and sells them for $100. After one month, the price goes down to $90 a share, where he buys all 1000 shares at $90 and returns them to you, pocketing the $10,000 as profit. In this case, he wins if the price falls. The thing that is incredibly risky about short selling is the fact that there is a limit to your upside, but the downside isn’t capped at 0. Going back to the example, if after one month the price of Apple’s share rises to $300 per share, he still has to buy those shares back to give them to the person he borrowed, so in addition to losing his initial $100,000, his losses increase exponentially increase to a total of $300,000. This is what occurred in the 2021 GameStop fiasco, when retail traders (non-institutional money) noticed a massive short position by institutional money against GameStop, and rallied it, costing the short-selling firms nearly $1 billion and even triggering the collapse of Melvin Capital.
Hindenburg Research, founded only 8 years ago, revolutionised the activist investor industry by fusing it with short selling and detailed truth-seeking reports to create the hands-off approach to activist investing. Unlike an investor like Pershing Square or Elliott Capital Management, which acquires large stakes, pushes for board membership, and attempts to deliver shareholder value by doing something about the company from a leadership or operations standpoint. Hindenburg, founded by Nathan Anderson, prepared investigative reports on target companies by going through their public records, internal corporate documents and by talking to employees. Each report was then circulated to Hindenburg's limited partners, who, together with Hindenburg, took out a short position in the target company before publicly releasing the report. Hindenburg profited if the target company's share price declined. In essence, they would spot some managerial malfeasance, take a short position out against the, company, publish a report about said malfeasance in the shorted company, and if that company fails (or its share price falls) then Hindenburg wins.
Anyone can claim to make a report alleging malfeasance and corporate fraud, however, when you are one of the major catalysts to the downfall of a Wall Street darling, you tend to get noticed.
The Nikola Report: In September 2020, Hindenburg Research published a report on the Nikola Corporation, a company which had teamed up with General Motors to produce hydrogen and battery powered electric trucks, alleging the company of being "an intricate fraud built on dozens of lies" and argued that its founder, Trevor Milton, was responsible for much of the fraudulent activities. Following the release of the report, Nikola's stock dropped by 40% and a Securities and Exchange Commission (SEC) inquiry was opened. While Milton initially disputed the allegations, he later resigned from his position as Executive Chairman and was eventually found guilty of wire and securities fraud. In November 2020, Nikola stated that they had "incurred significant expenses as a result of the regulatory and legal matters relating to the Hindenburg Report.” On February 19, 2025, the company filed for Chapter 11 Bankruptcy as a result of Hindenburg Research's report.
Adani Group Report: In January 2023, Hindenburg reported that it had short positions in India's Adani Group and flagged debt and accounting concerns. Concurrently, Hindenburg released a report claiming that Indian conglomerate Adani Group "has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.” Soon after the report's release, Adani Group companies experienced an acute decline in their share prices. In a follow-up piece, The Guardian indicated that Hindenburg called on the Adani Group to sue if they believed the report was inaccurate. By the end of February 2023, the group lost $150 billion in value. Gautam Adani's personal net worth came down as he fell from 3rd richest in the world to the 30th richest within a month after the report was published.
Adani Group responded by accusing Hindenburg Research of launching "a calculated attack" on India. In response, Hindenburg Research released a statement saying that Adani had dodged key questions raised by the firm's report and instead resorted to threats. The firm stated they stand by their statement and dared the Adani group to sue. Due to the allegations, American finance company MSCI cut the free-float status of four Adani firms, and Moody's Investors Service downgraded the ratings outlook of four firms. Credit Suisse Group AG stopped accepting bonds of Adani companies as collateral for margin loans to its private banking clients.
The Securities and Exchange Board of India (SEBI) issued a show cause notice to Hindenburg Research, accusing them of using non-public information to short Adani group stocks, causing a $150 billion market value loss. SEBI claims Hindenburg's report misled readers and created panic. Hindenburg denies the allegations, calling SEBI's actions an attempt to silence critics and asserting minimal profits from the Adani shorts.
In August 2024, Hindenburg Research released a report accusing SEBI chairperson Madhabi Puri Buch and her husband, Dhawal Buch of having a stake in dubious offshore entities used to artificially inflate shares of companies owned by the Adani Group. The report says, "We find it unsurprising that SEBI was reluctant to follow a trail that may have led to its own chairperson".The couple later denied the claims.
Hindenburg vs Activist Investor; The Icahn Report: In May 2023, Hindenburg released a report on Icahn Enterprises, which fell over 50% in the month after Hindenburg disclosed a short position against it. They classified the structure of Icahn Enterprises' dividend structure as "ponzi-like", and noted Jefferies Group's research on Icahn Enterprises as being "one of the worst cases of sell-side research malpractice we’ve seen”.
Unfortunately, as of January of 2025, Nate Anderson released a 1,300-word personal note stating that Hindenburg is being shut down, stating “we finished the pipeline of ideas we were working on.”
Conclusion:
Activist investors are the wolves of Wall Street, stalking underperforming companies with ruthless precision. They claim to be champions of shareholder value, but their tactics often leave behind scorched earth, layoffs, slashed benefits, and gutted corporate cultures. While research suggests these interventions can boost stock prices and operational efficiency in the long run, the human and reputational costs are rarely factored into the equation. The Disney layoffs, Southwest’s abandoned policies, and the hollowing out of once-beloved brands reveal a darker truth: activism prioritizes short-term gains over sustainable growth. The market may applaud, but employees and customers pay the price.
Yet, dismissing activists entirely would be naive. They serve as a necessary counterbalance to complacent management, forcing bloated corporations to streamline and adapt. The likes of Carl Icahn and Nelson Peltz have exposed weak governance, unlocked hidden value, and even ousted ineffective CEOs. The data shows their campaigns often lead to lasting improvements, but at what cost? When the sole metric of success is share price, everything else, innovation, employee morale, customer loyalty, becomes collateral damage. The real question isn’t whether activists add value, but whether their version of "value" aligns with a company’s long-term health.
The rise of Hindenburg Research introduces a new dimension to activism, one rooted in exposure rather than boardroom battles. By targeting fraud and corporate malfeasance, they’ve toppled giants like Nikola and rattled empires like Adani. Their model proves activism doesn’t always require hostile takeovers; sometimes, sunlight is the best disinfectant. Yet, even here, motives blur. Hindenburg profits from destruction, not creation. Their victories are pyrrhic for employees and investors caught in the fallout. The line between watchdog and predator grows thin when the incentive is financial carnage.
For companies in the crosshairs, defence is possible but rarely graceful. Poison pills, scorched-earth tactics, and crown jewel sales may fend off activists, but they often weaken the company in the process. The best defence is proactive governance, strong leadership, transparent communication, and a clear strategic vision. Boards that ignore shareholder concerns invite attack, but those that cave to every activist demand risk losing their soul. The balance is delicate: resist too much, and you’re labeled entrenched; concede too easily, and you’re branded weak.
In the end, activist investors are neither heroes nor villains; they’re mercenaries in a high-stakes game. Their existence is a symptom of a system that prioritises quarterly returns over enduring legacy. The market may celebrate its wins, but history judges differently. For every Icahn-esque triumph, there’s a trail of shattered workplaces and eroded trust. The true test of activism isn’t just whether it lifts a stock, but whether it leaves a company, and its people, better than it found them. Too often, the answer is no.
Comments