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One of the most fascinating developments of modern times is the way a determined activist with a tiny shareholding can force change in a major business to an extent that traditional institutional shareholders have been rarely able to achieve.
One reason is that today's activists invest far more time and money in developing their criticisms than ever was the case with long-only managers, and they press their case with considerably more determination. Nor are they afraid to conduct the fight in public if there is something to gain from subjecting the board to a bit of embarrassment.
Whereas institutional shareholders always seem mindful of the sensibilities of the board - perhaps because they want to manage the company pension fund one day - activists have few such sensitivities. Incumbent management can often appear heavy-footed and slow-moving as a result.
To some extent, that has been the challenge facing HSBC, the latest giant to be caught in the activists' searchlight. Since early last summer, the bank has been subject to a barrage of well-researched criticism from New York investment group Knight Vinke. With the bank's AGM looming, it is about to erupt again.
Knight Vinke's central allegation was initially that the bank had under-performed its peers for some years. It sought to address this by beefing up the board, getting the group to focus on Asian growth markets and persuading it to sell underperforming or sub-scale businesses in other areas.
It also attacked the incentive schemes for management, which it considered opaque and poorly targeted.
While publicly dismissing the criticism, HSBC appears to have listene. There have been some board changes, a few disposals, and a re-affirmation on the central role of Asian markets. In addition, the executive incentive scheme to be put forward at the AGM has been modified. For this the bank deserves credit.
However, it may be that this serves only to clear away the undergrowth to set things up for an even bigger battle. The prime focus of Knight Vinke's concerns now is the US sub-prime mortgage business, then known as Household Finance and now HSBC Finance or HFC, which HSBC bought in 2003 very much as a last hurrah for previous chairman and chief executive Sir John Bond.
It was probably the most disastrous acquisition of modern times. Knight Vinke alleges that, taking into account the $14.8 billion (£7.4 billion) acquisition cost, HSBC has spent $60 billion on HFC, much of it buying "contaminated" assets from the company to help it financially. Knight Vinke also says SEC filings reveal that HFC loans are at least £27 billion below book value, and $80 billion of debt will have to be refinanced in the next three years. It quotes house broker Goldman Sachs as saying HFC may require a further $12 billion equity injection to keep it afloat.
Knight Vinke wants the board to find some way to ditch the American business because it thinks HSBC and its shares would be worth much more without. Trouble is HFC could not stand on its own feet because its business model requires it to raise money in the wholesale markets, and that is currently impossible. So without HSBC, it would probably collapse.
HSBC says cutting HFC loose is "unthinkable", and it must fear the reputational damage it would suffer if people even suspected it might walk away. The $150 billion of HFC bonds and debt would plunge in value, and the squeals of pain from bondholders would reverberate round the world. No problem, says Vinke, that's what Chapter 11 bankruptcy protection is for, and besides HSBC does not need the bond markets.
Who knows which is right? This is a clash of philosophies as much as strategies. It encapsulates the difference between a long-term and a short-term view, and it is about to erupt again.
