Activist investors seek to unlock shareholder value by finding companies where the incentives for managers and shareholders are out of line. This can happen for a variety of reasons. The intention of an activist investor is to find a company which allows them to unlock value for shareholders (for more on this, click here).
We have designed this strategy so that it is likely to invest in the same sort of companies that activist investors seek out. The idea of this strategy is to ride on their coat tails as they agitate for change.
A more hands-on way to do this would be to use the results of this strategy as a filter and to monitor news regarding the most recent companies this strategy selects. If an activist investor starts buying up a large position in one of these companies, you may be in a good position to take advantage of this opportunity
We exclude OTC stocks as well as financial companies, and have included a trading liquidity criterion set to the same value as our portfolio value (i.e. $50,000) to filter out difficult to trade stocks. The per trade allocation is set at 4%. You can review the brokerage and slippage fees by clicking on this strategy’s Edit page. This strategy buys undervalued companies on a EV/EBITDA and Price-to-Sales basis, which have large cash holdings, and low pay-out ratios.