Hedge Funds Differ From Other Shareholder Activists in Tactics, Demands

Jan 13 2006 | 8:41pm ET

Shareholder activism, especially from hedge funds, gained momentum in 2005 and shows no signs of slowing down any time soon. Beth Young, a senior research associate at Institutional Shareholder Services, a leader advisor on proxy voting and corporate governance, believes that what makes hedge fund shareholder activists different from traditional shareholder activists is a combination of the tactics they employ and their demands.

"What is noteworthy is they are using more aggressive tactics and are engaging companies around broader issues," she said, explaining hedge funds are much more "company specific" rather than issue specific in their goals. For example, a hedge fund may push for a company to spin-off part of its business or to oust its chief executive, rather than a more generic demand such as calling for improved corporate governance.

According to Young, instead of using the 14-a8 form, which shareholders file with the Securities and Exchange Commission, hedge funds are running their own solicitations and trying to push through director nominees. She added that they are also using good old-fashion pressure tactics, including the media, to shame boards. "That is not what you traditionally see shareholder activists doing," she said.

In fact, the past few weeks alone, a handful of hedge funds have come out kicking and screaming, demanding blood on the floor from companies they think are either underperforming or just plain mismanaged. (See our list of the latest shareholder salvos)


In Depth

Prominent Hedgie Renee Haugerud Embroiled in Ugly Child Custody Battle

Sep 10 2014 | 2:43pm ET

A high-profile hedge fund manager is caught up in a nasty child custody battle in...

Lifestyle

Full House’s Stamos To Play TV Hedge-Fund Manager

Sep 5 2014 | 4:43am ET

The life of a Connecticut hedge-fund billionaire is coming to the small screen.

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.