Corporate Finance Puzzle 2: Activist Investings' Role in Markets

Activist investors target companies that they believe are ripe for change and push aggressively for change, using every mechanism they can. While they are generally not "nice" people and are viewed as destructive by many, they provide a service to investors by acting as a counterweight to managers. In this (old) post of mine, I try to take a  bird's eye view of activist investing: 

I won't claim to be unbiased but activist investors are neither the "destructive monsters" that their critics paint them to be nor are they the angels of value that they themselves promote as. They generally target badly managed companies, push for change (though they seem to focus more on the liability side of the balance sheet, than the asset side) and enrich themselves and other shareholders in the company in the process. It is therefore not surprising that they have targeted Softbank, a company which after its mess-up on WeWork, has lost the trust of its shareholders. This post from late in 2019 captures my views on the company and where it stands: 

The topping for this story is the news that Elliott Management has targeted Softbank for change and specified the changes it would like to see:


  1. Why did Softbank get targeted by Elliott Management now?
  2. What do you think of Elliott’s proposals for Softbank?
  3. Assuming Softbank decides to fight Elliott Management, what would you advise Softbank to do?
  4. More generally, what are the pluses and minuses of having activist investors in a market?