Friday, 3 April 2015

Top Five skills of an Activist Investor

Activist investors are like dragonflies, predatory in nature and with eyes for investment opportunities not readily seen by others. Like dragonflies, activist investors have a wide compounded visual of the investment landscape and will generally spot a value creation opportunity before most other investors.

Here are the top five traits of an activist investor. The activist investor:

  • Must be equipped with a strong cash/dry powder base to facilitate any capital structure to pursue an investment opportunity (cash to the activist investor is like water to the dragonfly, neither can survive without the existence of cash and water)
  • Must have the ability to hover over any industry with the flexibility to move quickly in any direction within that industry whenever the investment opportunity presents itself
  • Must be decisive when executing its capital deployment to optimize the return on capital allocated
  • Must understand the cycle of capital flow and position themselves in the cash flow traffic of the investment landscape and lastly,
  • Must be aggressive in establishing the value creation message and at the same time be a friendly face to the investment landscape without being a grave dancer. 

Focus InSight: If you want to be an activist investor, copy the ways of the dragonfly and be wise.

William "Bill" Ackman is the consummate activist investor. See link.

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Feel free to ask questions and make comments.