This issue of BoardroomDirect® includes an article about the influence of activist shareholders and the role they play today in forcing change. There is also news about a Delaware bill that would prohibit fee-shifting bylaws, environmental groups warning boards of fossil fuel companies about climate-change litigation, the new converged revenue recognition standard, and the first round of conflict minerals disclosures.
Directors for public companies of all sizes are spending time in their boardrooms discussing one particular class of shareholders: activists.
What is the current view of activist shareholders, including certain hedge funds?
In many cases, activist hedge funds deliver steady returns, produce sophisticated plans to improve value, have effective messaging, and can have a big impact with relatively low investment. In addition, they are more accepted in the marketplace. This was the view from a March 2014 PwC Deals practice webcast.
“One of the key points is that the activist hedge funds are outperforming the market,” Ron Chopoorian, a PwC Deals partner, said. “There’s also been a fundamental shift in the sentiment about activists. They are no longer seen as corporate raiders; they are seen pushing for shareholder value.” Some evidence of that acceptance by the marketplace is that pension funds and endowments committed $7 billion to activist funds in 2013, according to PwC.