Cove Street’s experience in working collaboratively with companies to improve corporate governance practices and capital allocation strategies has yielded a very simple insight: being a so-called activist investor requires an enormous amount of work. Forcing a company to change—often through a very time-consuming and expensive public process—has any number of pitfalls. And even if you are successful in taking control of a company, it is possible that when you actually get into the boardroom, you find out that the changes you were hoping to catalyze are unlikely to work, either for cultural or competitive reasons.

Our personal stance is that it is much easier to invest in good businesses run by people who understand capital allocation and what good corporate governance looks like. Then, when the companies occasionally need a nudge to change certain processes or behaviors, you can work behind the scenes—what we would call suggestivism—to improve the outcome for all shareholders. Think of Cove Street as providing a SaaS solution: Suggestivism-as-a-Service.

In a recent interview with Activist Insight, I discussed how suggestivism works in practice and provided some concrete examples of how Cove Street engages with companies on the issues of governance and capital allocation.

Feel free to check out the podcast here.