They have been called barbarians, pirates, and bullies. Many of them relish their role as the bad boys of the investment world. CEOs and presidents of underperforming public companies live in mortal fear of them. These people are activist investors. They buy stakes in underperforming companies and then try to bully management into making changes.

While the well-known activists like Carl Icahn and Robert Chapman get most of the press, there are other activist investors, many of whom focus on smaller companies. One of these smaller activists just took aim at Brooks Automation (NASDAQ:BRKS), which provides equipment and software used to manufacture semiconductors. It competes with MKS Instruments (NASDAQ:MKSI) as well as the much larger Applied Materials (NASDAQ:AMAT).

Funds managed by David Nierenberg now control about 7.2% of the outstanding shares of Brooks Automation. In a recent letter to management, Nierenberg praised Brooks' recent moves to cut costs, while criticizing the company for being too conservative with its capital. With a market cap of around $1 billion and $303 million in cash, the criticism rings true.

Nierenberg wants the company to buy back 10 million shares, or about 14% of the total shares outstanding, within a year. He argues that the company could easily do that while retaining plenty of cash to grow the business. By reducing the company's assets, a large share buyback would increase its return on capital. With fewer shares outstanding, earnings per share would increase. This is a fairly standard argument for an activist investor.

While activist investors are often criticized for being focused solely on the short term, underleveraged balance sheets can hurt companies in the long run. While it may comfort management to have a large hoard of cash, that cash earns paltry returns relative to the returns on capital invested in the operating business. In the case of Brooks Automation, it would be hard to argue that it needs very much cash on hand: While the company is in a cyclical industry, it has had positive free cash flow for the past three years.

Whether or not it leads to profitable investment opportunities, following the filings of activist investors can be quite entertaining. If you wish to do that, you can search the SEC's EDGAR database for recent 13-D filings for small companies.

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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.