NEW YORK (AP) — Companies stopped paying dividends and stockpiled cash during the Great Recession, and shareholders didn’t complain. Now they want a reward for their patience.
American companies are holding $1.9 trillion in cash, a record. The large businesses that make up the Standard & Poor’s 500 index, all of which answer to public shareholders, have $940 billion on hand — $300 billion of it accumulated since late 2008, says Howard Silverblatt, senior index analyst at S&P.
Shareholders want the companies to start putting that cash to use. The most pressure is coming from activist investors, who buy stakes in companies and then try to influence management to make certain changes that they say are in shareholders’ interest.
“We’ve been in bunker mentality for too long,” says Eric Jackson, who runs the hedge fund Ironfire Capital. He predicts that activist shareholders are about to become “a lot noisier.”
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