A brief history of activist investors in tech and the role they play • TechCrunch

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Tuesday active Starboard Investor Value open Significant stake in Salesforce, sending the company’s shares up more than 7%. A hedge fund founded in 2002 by Jeffrey Smith and Mark Mitchell, Starboard has a history of influencing change at major corporations, launching the media startup Patch from AOL in 2014 and replacing the entire board of directors at Darden Restaurants, the company that owns Olive Garden. Longhorn Steakhouse.

Activist investors — typically niche hedge funds that buy large minority stakes in publicly traded companies with the aim of changing the way they are run — have become more active in the tech sector in recent years. According to an analysis by Bloomberg Low, investor activists launched more campaigns in tech during the second quarter of 2022 than any other sector.

But how many of these activists have succeeded in achieving their goals? It depends on how you define success.

Harvard, Columbia and Duke study Published in 2013 looked at 2,000 interventions by hedge fund activists from 1994 to 2007. It found that in the short term, stocks tend to rise about 6% when activist investors intervene. And highs are not temporary. In the five years since activist investors came on the scene, the stock prices of the companies targeted by them tended to hold on to the initial gains — even when the activists used aggressive tactics.

Consider the 2008 Motorola business split, a move advocated by activist investor Carl Icahn. In 2011 Motorola’s owners owned 20% more stock than they did before the split – much of it in the form of result From Google’s deal to buy mobile-focused Motorola Mobility. As Icahn predicted, splitting the company made the individual pieces even more tempting.

But that’s not always the case – as the past decade or so has shown.

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