Hedge fund bullies…
Saturday, 16 June 2007
I read with interest an article on Hedge fund activists. It’s a story that captured my thoughts following Anthony Boltons comments...see here
Whilst I have a number of issues regarding investing into hedge funds and the lack of transparency, I am certainly not anti the 10% of these activists. What do we mean by activist? Wherever possible the activists seek to own a small percentage of shares in the company where they want to see change. As the article by David Katz says
“Their aim is to boost the stock price by pushing for a strategic move such as a spin-off or sale of assets, a large buyback or dividend, or a change in management. They can make life miserable for CFOs and other executives as they promote their agendas. Members of the new activist club are garnering reputations as aggressive, often successful, gadflies. In most cases, however, activist investors like to operate behind the scenes, working with management to encourage change. “Our goal isn’t to get into a fight,” says Phillip Goldstein, founder of Bulldog Investors, an activist hedge fund manager. “It’s to try and make money.”
It is important for the management of these large public companies to remember they are often owned by institutions, who in turn have thousands of individual investors. In other words, you and me. They need to focus on returning profits to us as shareholders first before feathering their own nests. If activists investors are making life uncomfortable to some management, maybe its because they deserve it…maybe they have become too self important and have forgotten whose money it is and for whom they are making a return on capital. The shareholders.
In an ideal world, I would like to see the hedge fund managers using their own money and take the risks themselves rather than encourage private investors as the average returns are not significant. Yet inevitably, the investors tend to be drawn to these success stories of the relatively few making above the market average returns.
Categories: Hedge Funds, Active Funds
posted by Murray Round Wealth Management @ 10:07,
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Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
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