Shareholder Activism Emboldened: What Does It Mean For The Average Investor

One of the interesting aspects of trying to bring a more personalized and flexible approach to passive, long term investing is how many tailwinds there are at the moment.

We have written on the importance of technological innovations like widely available fractional investing and cheaper services such as but there are also regulatory changes that enhance the value of being able to customize your retirement portfolio as well.

One of the quieter and least appreciated aspects could be the changes around investor activism and the right for investors to potentially make their voices heard in the boardrooms of the biggest companies in the country and the world.

The SEC has recently made it easier for activist investors to achieve the goal of inserting their own (new) board members on the boards of the companies they are actively trying to influence to change course.

The purpose of changing the board is to change the direction of the company.

Why is this such a big change?

• Previously if an activist wanted to change a single board seat (or a few) they had to convince other investors to vote for their entire suggested board.

Therefore, it was an all or nothing proposition. This meant that a lot of large institutional investors could plausibly suggest that they didn't like some aspect of an activist's board and use that excuse to reject the whole proposal out of hand.

Now the SEC has given activist investors a weapon they have long wanted:

• A "universal" ballot where investors (or their proxies) vote for individual board members, not the entire slate.

At an instant, this has raised the odds of activist success (and therefore the odds of activist campaigns period).

The number of activist campaigns going forward will therefore rise. This will increase the headaches for company executives, provide opportunities for investors willing to do the tough work of investor activism and change the landscape of what is possible.

But what about the takeaways for you, the retail investor:

• Well, all of this is exciting and also, perhaps most importantly, hard to handicap.

The most likely result of this rule change will be unexpected. The unintended consequences of any regulatory changes are almost always the most important precisely because no one predicted them.

But that will require time to discover.

For now, the important takeaway is that:

• We may be moving from an age where investing got cheaper and cheaper for the average investor instead to one where the range of what even a small and passive investor can have far more say in what they own and, finally, what those assets are up to.

One aspect of this shift could involve voting in activist battles, or just voting about the direction of your investments period.

Most retail investors never bother or are not even aware they can. Instead they let larger asset managers or proxies vote on their behalf.

But as the value of the vote and as technological, regulatory and entrepreneurial changes make it both easier to vote your preferences AND make yourself heard in the C Suite of some of the world's biggest companies.

The GameStop fiasco of 2021 clearly demonstrated the power of what is possible when regular investors band together and act in their best interests rather than the interests of the financial industry. Some surprising and potentially even awesome (in the true sense of the word) possibilities can be achieved.

These are trends that Pebble Finance is not just hoping to catch but rather, actively accelerate with our product, with our core technology and our product.

We want to let you choose what you own and also be able to let your voice be heard.

The good news as we head towards 2023 is that it is becoming not just easier to make your voice heard but also to personalize your investments but also structure things appropriately.

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Have questions? Care to find out more? Feel free to reach out at contact@pebble.finance or join our Slack community to meet more like-minded individuals and see what we are talking about today. All are welcome.