What is an Activist? There is a lot of confusion about what exactly is an activist and what they are doing. Most commonly, people confuse activists with corporate fiduciaries. However, a closer examination shows that there are major differences between these two types of investors.

Corporate shareholders can be described as those with the best interests of their stockholders at heart. They follow the policies of their corporations where those policies might directly or indirectly benefit them (i.e., dividends). Unlike institutional investors, however, who do not make stock decisions and who therefore have no reason to care what a corporation’s customers think, corporate shareholders are motivated by two things: first, a desire to earn a return on their investment and second, a fear of losing money if that investment goes south. If an investment goes south, they stand to lose even more. Thus, an adversarial relationship develops between these two sets of investors.

Byzantine corporate governance systems make it difficult to tell which set of interests is driving a company. Often times, only the Board of Directors will have the answer. If a company is generating strong sales from very profitable sources, then there may be little need for an activist investor strategy. However, if the company continues to lose market share to less profitable companies, then there may be a need for such an approach.

First, what is an activist investor strategy? Activist investor strategies take opposing positions on the same issues or related issues. For instance, there are some who would be bullish on oil prices while others would be bearish. The point of these strategies is not to exact change, but to capitalize on changing trends so that the target company does not feel compelled to change its strategy to protect its downside risk (i.e., its stock price). Activist hedge fund activism has been used successfully to push a company in one direction on one issue, while forcing another company to adapt by changing its business plans in order to protect its downside risk.

Second, what is public company awareness, and how is it being used? Public companies have long known about their sustainability risks, especially when the company is younger (i.e., a young technology company versus a mature oil company). However, many new businesses were able to get off the ground because they had investors that were willing to absorb their losses when they fell short of their projections for revenues or profits.

Third, what is an activist hedge fund? Hedge funds are mutual funds composed of individual investors that use short selling and other derivatives to obtain a greater price advantage for themselves by taking a position on a company. A large number of hedge funds currently exist, but few of them are focused on primarily short-term or small-cap investments. Some of the larger hedge funds, however, also utilize a wide range of assets (not just equities) to diversify their investment portfolio to reduce exposure to any one company.

What is an activist investor? Activist investors tend to be younger, smarter, and more focused on short-term performance as compared to institutional investors. As an example, if a company is producing a product that a large portion of the public doesn’t want, the target companies’ Facebook or Twitter accounts will be flooded with hundreds of thousands of messages from irate consumers. The activists may decide to make social media posts derogatory of the target companies. They may also decide to launch large-scale campaigns against companies that are perceived to be supporting policies that hurt the middle class.

In all, the core purpose of social media, blogs, and techie news sites like podcatching is to make changes through controversy and debate. Activists and their allies use these platforms to make changes through debate and speech. agency can use the most abrasive tactics to drive sales. If you feel that you may fall into this category, take comfort in knowing that you can make changes to your online presence without resorting to tactics that could put you in an adversarial relationship with your targeted audience. Find an Activist Internet Marketing Firm to help you build your brand and get your message out.