Knight Vinke's influence

Knight Vinke, which currently has its sights set on HSBC, claims to have led the shake-up of Royal Dutch/Shell. But some argue that Shell's restructuring in 2004 was inevitable, following its crisis over reserves the year before. When the fund manager went after Suez, also in 2004, Knight Vinke was accused by the French utility's management - and by some analysts - of being somewhat tardy. Suez was already working to a new action plan and the board had only just completed a review of its structure. More importantly, power prices were on the move, boosting stocks across the sector. Similarly, HSBC announced a new strategy, with a stronger focus on Asia, just seven months ago.

In the end, an activist's real influence matters less than the perception of influence. Knight Vinke's "victory" over Shell is now presented by the fund manager as fact, repeated by the press when reporting new campaigns. Public communication is an important part of its very successful investment process, which also includes exceptionally detailed bottom-up research. While Knight Vinke may not alter a company's strategy as much as it thinks it does, it is certainly possible that change is speeded up.

All activists depend on good timing. Not only has Knight Vinke operated in a bull market since the company was founded with seed capital from the California Public Employees Retirement System in 2003, it has also proved itself a fantastic stock-picker. It buys shares when they are out of favour and represent good value. Knight Vinke's investment record cannot be questioned. Perhaps returns would be even higher, if it dropped its campaigns altogether.