Jennifer Coombs Blog | Dear Activist Investors: Socially Responsible Investing | Talkmarkets
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Jennifer Coombs has nearly a decade of experience in the investment world, with a variety of titles and investing functions from trading to model building. GradMoney was created from a desire to change the way young adults view the stock market and a desire to save the general public thousands ... more

Dear Activist Investors: Socially Responsible Investing

Date: Thursday, August 2, 2018 7:22 PM EDT

I want to talk about an important way that the general public can practice socially responsible investing - all without a degree in finance or even investing in the market at all. However, in order to impact the world this way, you need to have an open mind and a logical brain. I'm a huge supporter of using the power of activist investors to help shape the course of not just the market, but the why corporations do business and respond to consumer concerns.

Activist Investors are individuals or groups who purchase large numbers of a public company's shares and/or tries to obtain seats on the company's board with the goal of effecting a major change in the company. A company can become a target for activist investors if it is mismanaged, has excessive costs, could be run more profitably as a private company or has another problem that the activist investor believes it can fix to make the company more valuable. Obviously an activist investor is more often than not motivated by money rather than doing it for the greater good. However, when the largest consider group in the world is concerned about certain business practices, it would of course be the most profitable and in their best interest to appease this group for better or worse.

Now, it’s easy to get your blood boiling over the fact that these people spend your annual salary in the course of a few hours. But they are a very important solution to the problem. Think of billionaire activist investors like (smarter) politicians. Imagine if the 99% petitioned the 1% to implement socially responsible investing changes on their behalf? How can they say ‘no’ to a million people? Don’t believe me when I say this is a real thing? Let me give you a real example…

This is a fellow many of you will recognize – Warren Buffet.

When I was an associate analyst, I noticed a framed letter in the office of one of the portfolio managers I supported and one day I asked him about it. He told me that a few years back he was convinced that he had a unique and interesting perspective on a particular stock (which I cannot disclose) and so he wrote a letter to Warren Buffet saying that he should consider including the company in the Berkshire Hathaway portfolio.

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