Investors: "Activist pressure": What the entry of hedge funds means for companies
Activist investors usually pressure management boards to cut costs and make sales. Studies show that they now operate more subtly - and their impact often has damaging long-term consequences.
Frankfurt, Düsseldorf. Not every shareholder is satisfied with dividends and the prospect of rising share prices. When a hedge fund invested in pharmaceutical supplier Gerresheimer in 2024, the restructuring began shortly afterwards: company shares were sold, and about a year later the CFO was replaced - presumably at the instigation of the investor.
Such activist investors, mostly hedge funds, want to influence the company's strategy and, after investing, push for cost cuts and partial sales. Often they exert pressure through public campaigns in which they criticize certain business processes or management personnel. As a current study by the management consultancy Alvarez & Marsal (A&M) shows, activist investors are increasingly pursuing their goals behind the scenes - through talks with management, for example.
The study is exclusively available to the Handelsblatt. What loud and quiet "activists" have in common, according to the study, is that they want to quickly increase the company's share price - and thus their profit. As another study shows, this strategy is not without sometimes serious side effects.
Translated by urgent.news from Handelsblatt's report; automated translation may contain errors. Machine-written — it may contain errors, so check the original before relying on it.
