On Monday, an investment firm, Beach Inlet Capital Management, sent (and publicly disclosed) a letter to the Board of Directors of Atlanta Braves Holdings, Inc., the publicly-traded company that owns the Braves. In it, Beach Inlet urged the company to sell the ballclub.

I’ll get to Beach Inlet’s rationale, which is mildly interesting, in a bit, but first, let’s discuss what it’s trying to do. “Activist investors,” as they’re called, are part of the investment landscape, particularly in the U.S. Since publicly-traded companies are owned by their shareholders, activist investors take a stake in companies and try to persuade management to take certain actions. If management resists, the activists may lobby other shareholders to join them to force a change.

For example, in 1989, Kohlberg Kravis Roberts & Co. (KKR) bought the consumer products firm RJR Nabisco via a famous bidding war. KKR, a large private equity firm (a firm that raises money from investors, typically to buy companies in their entirety), outbid RJR Nabisco’s management to take over the company via a leveraged buyout (LBO, which uses large amounts of debt to complete the purchase), taking it private.

KKR is one of the largest private equity firms, but activist investors need not be behemoths. In 2021, Engine No. 1, a small hedge fund (hedge funds, unlike private equity firms, typically buy stakes in companies, not own them altogether), successfully won a campaign to gain seats on ExxonMobil’s board to force the energy giant to expand its focus to include low-carbon energy. Engine No. 1 was able to do this despite owning a tiny stake (valued at $40-$50 million, about 0.02% of shares outstanding) by convincing other shareholders to vote for its proposals.

Beach Inlet is trying to do the same, forcing Braves management to put the team up for sale. Will their efforts succeed?