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This year activist investors have been busier than ever, but they're just getting started.
That's because conditions in the market right now couldn't be any more ideal for activist investing, and the hedge fund managers who do this sort of thing are not known for letting opportunities go to waste.
The man who wrote the book on activist investing, Carl Icahn, said as much in a Nov. 4 statement to Icahn Enterprises LP (Nasdaq: IEP) shareholders.
While Icahn's activist investing resume dates back to the late 1980s, his latest targets have been Netflix Inc. (Nasdaq: NFLX), which delivered an $800 million profit for him last month, and Apple Inc. (Nasdaq: AAPL), which he is currently pressuring to borrow $150 billion for a massive stock buyback.
"In my opinion there has never been a better time than today for activist investing," Icahn wrote. "While I am very proud of IEP's record over the past decade, I believe this record will pale in comparison to what is yet to come."
Activist Investing: So Hot Right Now
Carl Icahn has two main reasons for being so excited about the prospects for activist investing now: low interest rates and a growing awareness among institutional investors of the "prevalence of mediocre top management and non-caring boards at many of America's companies."
And that's not even an exhaustive list. Right now there just aren't that many natural catalysts left to drive stock prices higher.
"First of all, we have a slow growing economy. It's hard for a lot of companies to get revenues up. They can't get new business. They've de-levered, so it's hard to get margins up. So what's the last thing you can do? It's take on debt and give something back to shareholders that way," Yahoo! Finance columnist Rick Newman observed recently.
As activist investors target more and more companies, retail investors need to keep them on the radar screen because they almost always have a significant impact on stock prices.
And even when interest rates eventually rise and conditions are less ideal, activist investing will only slow somewhat.
Money Morning Capital Wave Strategist Shah Gilani said activist investing has proven itself such an effective tool for moving stocks that we're guaranteed to keep seeing more of it.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.