One of the biggest stories on Wall Street this week was Starbucks poaching Chipotle’s star CEO Brian Niccol. The move came after activist investors led by the powerful Elliott Investment Management pushed for change at Starbucks, adding pressure that ultimately led to the ouster of chief executive Laxman Narasimhan, who had presided over declining sales in the past two quarters. Starbucks shares, which had fallen about 18% year-to-date during a broader stock market rally, jumped 20% on the news.
These developments came as a vindication for Elliott Investment Management and Starboard Value, which had both amassed stakes in Starbucks this year and pressed for change. Elliott is arguably the most well-known of the activist investors—a term that describes funds that acquire stakes in companies with the goal of influencing how they are run and managed. Once an activist acquires a substantial stake in a company, they will often push the businesses to restructure, or to sell off assets or to replace management.
