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Activist Investors Agitating Biotechs Bring Multi-Bagger Returns

By Dave Williamson - Feb 28, 2014 at 7:05PM

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The success of Carl Icahn has brought increasing focus on activist investors.

Activist investors have garnered increasing attention, as they try to bend health-care company management to focus on maximizing shareholder value.These proxy fights are important for investors, especially in biotech, where buyouts are the preferred outcome to many holdings. 

The success of Carl Icahn's years-long campaign agitating Forest Labs resulted in a successful takeover by generic drugmaker Actavis. Icahn deservedly crowed about a deal that caused a one-day 28% pop, and ended his time as a shareholder with roughly $1.7 billion in net gains. Investors who jumped in following Icahn's initial investment would have seen three-bagger returns. 

In this segment from Market Checkup, The Motley Fool's health-care focused investing show, analyst David Williamson dives into the activist investor trend, highlights recent successes and ongoing fights, and explains why investors need to watch this action carefully.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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