What it is:
A hands-off investor has a substantial interest in the management of a company, but chooses not to actively participate in it. It is the opposite of a hands-on investor.
How it works (Example):
A hands-off investor could be a large-scale stockholder who does not, as a matter of choice, play a role in how the concern is managed. For example, a hands-off investor may remain fully-informed of management decisions and company plans, but choose not to intervene or be delegated responsibility. A hands-off investor should not be confused with a hands-on investor, which is an investor with a similar stake who chooses to take a proactive management role.
Why it Matters:
Though a hands-off investor may take a passive stance for a variety of reasons, it is usually because he is content with the current management style and direction in which the company is headed.