Tim Hortons is the latest in a string of companies to be targeted by activist investors in the U.S. This could be a good thing, say experts.

Canadian companies like Tim Hortons Inc. are easy targets for activist investors and thats not necessarily a bad thing, according to experts.

Its basically shareholders doing what they should do, which is act like owners, said David Baskin, president of Baskin Financial Services, based in Toronto.

Management has every obligation to answer them seriously. They have millions of dollars on the line.

Activist investors are stockholders with a significant financial stake in a public company who lobby management for change to increase shareholder profits.

Sometimes management agrees changes need to be made. Sometimes they resist, leading to a bitter proxy battle like the one fought at Canadian Pacific Railway in 2012.

Although Tim Hortons stock, which closed at $57.15 on Wednesday, is nearly double what it was at the end of the first day of public trading in 2006, it hasnt done much in the past year, Baskin pointed out.

Two U.S. hedge funds have stepped in to ask Tim Hortons to make changes.

The latest is the U.S.-based hedge fund Scout Capital Management, L.L.C. which is asking Tim Hortons to scale back its expansion into the U.S. It also wants Tim Hortons to increase debt to buy back shares to increase earnings per share.

In April, Highfields Capital Management LP asked Tim Hortons to buy back stock to increase value for investors. It also asked the company to create a real estate trust for its real estate assets and spin off or sell its distribution business.

Tim Hortons management has said the U.S. expansion is on solid ground and the company is not a good candidate for a REIT.

I think this is the new reality, said Richard Powers, academic director of the directors’ education program at the Rotman School of Management.

Where an activist shareholder sees an opportunity to extract some value from a company, they are going to go for it.

You can take a look at just about any company and find something that they could do better.

But sometimes activist investors are looking at immediate returns as opposed to long term value, said Powers

Sometimes, as in the case of Canadian Pacific Railway, the process can be bitter, even dramatic. In 2012, the chief executive officer at CP stepped down hours before the annual meeting when it became clear he would not be re-elected.

CPs new CEO, Hunter Harrison, drove shares to a high of $142.42 in May from $46, which is where they were trading when hedge fund Pershing Square Management began buying shares.

Hes also cut 6,700 jobs. He was awarded $49.2-million in total compensation in 2012, including salary, pension and other payments.

In June, Pershing sent CP stock tumbling when it said it would sell nearly a third of the stock it owns, shedding up to 7 million of its 24 million shares. The stock closed on Wednesday at $127.32.

Scout Capital Management, based in New York, owns or controls a 5.5 per cent equity interest in Tim Hortons.

Thats enough clout to force a shareholders meeting.

Walied Soliman, partner at the Toronto-based law firm Norton Rose Fulbright, said there are a variety of statutory and regulatory reasons why Canada is an activist-friendly jurisdiction, including the fact that shareholders with a five per cent interest can require that a meeting of shareholders be held.

Boards in Canada need to be much more mindful of the issues and concerns raised by shareholders, said Soliman, an expert in proxy battles.

Former Tim Hortons CEO Paul House has said repeatedly that the expansion into the U.S. is on solid footing and will pay off in the long term.