Five Activist Hedge Fund Battles To Watch In 2015

Jan 20 2015 | 6:22am ET

ValueAct vs. MSCI Inc. (NYSE: MSCI)

Two large hedge funds are pushing for a breakup of MSCI, one of the world’s largest providers of equity, fixed income, and hedge fund stock market indices.  Casual investors might recognize the company best for publishing Morgan Stanley’s emerging markets vehicle iShares MSCI Emerging Markets Index (ETF) (NYSEARCA: EEM)

Activist hedge fund ValueAct recently boosted its position in MSCI to 8.3%, according to a recent filing with the SEC. Part of its strategy is to urge the index company to break up and sell its stock market index business at a time when similar companies are selling at lofty values. In addition, it has also demanded board representation. However, MSCI has refused to provide that board seat.

As a result, other large shareholders have expressed their frustration. Independent Franchise Partners (which owns an 8.58% share in MSCI, according to Morningstar) and a third large investor are supporting ValueAct’s demands.

This battle will continue, especially given the fact that index businesses are hot commodities. Last week, Nasdaq purchased U.S. index provider Dorsey Wright & Associates for $225 million.

In 2013, the Russell indexes fetched $2.7 billion from the London Stock Exchange.

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