August 07, 2006

Hedge Fund Activism Pushes the Firms Up

Shareholder activism usually involves one or more hedge funds buying large stakes in a public company and demanding change. Surprisingly, it is having success in pushing up the firms. A recent study found that more than one-third companies have been successful in meeting their strategic direction because of hedge fund activism.

Activism has the potential to affect the course of hundreds of companies over the next few years. Today's fund activists attempt to force changes without buying the company outright. As activist funds continue to enjoy success and healthy profits compared to other hedge fund investment strategies, their ranks will expand.

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