Activist Investor News

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Friday, June 19, 2015

Wolf Pack Activism: A Quick Look at Hedge Fund Activism

The National Law Review wrote a recent article on the highly debated topic of wolf pack activism.

Here are the charts from the article and a link below to read the article in its entirety.

Wolfpack Activism: A Quick Look - chart 1
Chart 1 shows that there were more than 100 13-D filings by activist hedge funds in each of the past 5 years. In this period, activist influence appears to have been on the rise. Not only has the success rate for proxy fights launched by activist hedge funds increased, but activists have also been targeting larger companies.

Wolfpack Activism: A Quick Look - chart 2
Chart 2 shows that, typically, activists take around 10 days after crossing the 5% threshold to file Form 13-D with the SEC. This has remained relatively stable, despite a small dip in 2012. This chart also illustrates that, as of the date of the 13-D filing, the median shareholding by activists has remained relatively constant at approximately 6%.

Wolfpack Activism: A Quick Look - chart 3
Chart 3 sheds some light on activist strategies. In order to gain some insight with respect to wolf packs, we first isolate instances where the abnormal trading volume during the waiting period was more than 10% of the target firm’s shares outstanding. We then distribute 13-D filings across three buckets -- filings that were made within 3 days of crossing the 5% threshold, filings where the waiting period was between 4 and 7 days, and filings that were made 8 or more days after crossing the 5% threshold. The chart shows that there were 8 instances between 2010 and 2014 where the abnormal volume during the waiting period was at least 10% of the target’s shares outstanding and the 13-D filing was made within 3 days of crossing the 5% threshold. As expected, the number of instances where the abnormal trading volume during the waiting period exceeds 10% is greater when one focuses on 13-D filings made 8 or more days after crossing the threshold.

Click here to read the entire article: http://www.natlawreview.com/article/wolf-pack-activism-quick-look-hedge-fund-activism

The Secret To Jeffrey Smith's Success At Starboard? His Father's Juice Company

A recent Forbes article chronicles activist investor Jeff Smith, of Starboard Value.




Excerpt:

You don’t need a Wharton education to be a good investor

Starboard, which also counts Mark Mitchell and Peter Feld as co-founders, prioritizes passion and competitiveness when it hires new employees. “We look for passion, you need to love what you do,” says Smith. He adds, “you need competitiveness, some people miss that.”

“We want people who are really excited about winning; winning meaning that we make money, the stock gooes up and companies perform better. And we want people that are upset if things don’t go as well as it should. If it doesn’t bother you when an investment goes against you then there is a problem,” he says.
Full article found here: http://www.forbes.com/sites/antoinegara/2015/06/17/the-secret-to-jeff-smiths-success-at-starboard-selling-his-fathers-juice-company/


Tuesday, June 9, 2015

Winds of Change - Activism in Japan Article from the Economist Magazine

A recent article on activism in Japan from The Economist magazine was an interesting read.



Quick Excerpt here and link to the full article below:

"Such signals from the apex of the establishment, in a place where business heeds the government more than in perhaps any other big democracy, have not gone unnoticed among corporate leaders. And the government is offering more than gestures. On June 1st its new corporate-governance code came into effect, with the aim of shaking up companies’ slothful boards by, for instance, calling on them to appoint outsiders (many have none at present). This is the first time a Japanese government has laid down detailed rules on how firms should conduct their affairs.
Mr Abe’s attempts to make companies change their ways are one element of Abenomics, his grand plan to restore vim to the Japanese economy. The corporate reforms, along with monetary easing by the Bank of Japan, are the most tangible elements so far of the prime minister’s programme. His government has stood up to pressure from the Keidanren, Japan’s biggest business lobby, which tried its best to get the code watered down."

http://www.economist.com/news/business/21653638-prospects-shaking-up-japanese-firms-have-never-looked-so-good-winds-change

Tuesday, May 26, 2015

Warren Buffett: Activist Investor?

The CFA institute put up an article on Warren Buffett and is activist ways when he was running his Limited Partnership.

Read the full article here: http://cfainstitute.tumblr.com/post/119596271528/warren-buffett-activist-investor

Donald Ingham writes:
But in Buffett’s early days, he actually engaged in numerous activist investments, including his takeover of Berkshire Hathaway. Much like today’s most notorious activist investors (Carl C. Icahn, Bill Ackman), Buffett made a name for himself by identifying market inefficiencies that could be exploited for the benefit of his investors and public shareholders. But unlike the corporate raiders of the 1980s, Buffett wasn’t out to tear companies down. In fact, he wanted to help build them up.

Tuesday, May 12, 2015

Academic Research Uses Hedge Fund Solutions Data to Find Activist Funds Outperform


Top Hedge Funds and Shareholder Activism

Abstract

Using a large dataset of hand-collected information [captured from Hedge Fund Solutions' research on activist investments] on recent hedge fund activist interventions through mid-2014, we find that both the number of hedge fund activists and their interventions have increased recently, and that, contrary to suggestions in the literature, the average announcement period abnormal stock returns continue to be positive. We also find that the returns to hedge fund activism vary in surprising ways. Strikingly, the frequency of interventions is not significantly associated with higher returns, but returns are significantly higher for hedge fund activists that make larger investments. These results hold even after controlling for selection bias. Based on these findings, we develop a hedge fund reputation measure for the “top hedge funds” derived from the size of a fund’s investments in the recent past. This reputation measure is superior to the alternative ones we examine. Top hedge funds differ from other hedge funds in important ways: they tend to have significantly higher assets under management, they are invested in more portfolio companies, they have a longer track record, and they have a history of holding board seats in target firms. The market appears to anticipate the superior performance of these top hedge funds even before announcement of intervention. Moreover, post-intervention target-firm operating performance associated with these top hedge funds is significantly superior to that of other hedge fund activists.



To download and read the rest of their research using our data click here.

To subscribe to Hedge Fund Solutions' FREE weekly activist research click here.

For additional information about HFS activist research products contact Troy Marchand.

Monday, May 11, 2015

Interview With Damien Park, Activist Thought Leader

Damien Park, Activist Thought Leader, Gives The Blueprint For an Effective Activist Campaign

The Bulldog Investor did an interview with Damien Park of Hedge Fund Solutions. Park is a thought leader in the activist space. He is frequently retained by CEOs and Boards for his expertise. He is also regularly featured in leading news publications, now including the Micro Cap Investing Podcast. In this interview, Park lists the ingredients for a great activist campaign.

 Podcast: Download

Thursday, May 7, 2015

Land & Buildings Publishes "Restore MGM" Video



https://vimeo.com/126913415

This video can be found at https://vimeo.com/126913415
www.RestoreMGM.com


Background to the activism:

3/17 Land and Buildings (L&B) proposed MGM convert to a REIT to unlock value and nominated four to the board; L&B issued a presentation indicating a 70% upside in stock value

3/30 L&B filed preliminary proxy materials nominating four people to the board 

4/1 L&B sent a letter to MGM calling on the board to form a committee and engage an independent financial advisor to evaluate options to create long term valu

4/20 L&B sent a letter to shareholders highlighting the reasosn to vote for its four board candidates

4/27 L&B joined Pontiac General Employees Retirement System in calling for MGM to eliminate its Dead Hand Proxy Put provision in the company's debt agreemen

4/29 MGM issued a shareholder presentation titled, "Improved Stewardship for Improved Returns" 
On the same day Paulson & Co (a 1.42% shareholder) announced its support for MGM's nominees, saying the company should continue its strategy to build another resort in Macau and invest in non-gaming attractions in Nevada.