Bradley attorney Stephen Hinton was quoted in Hedge Fund Legal & Compliance Digest on increased hedge fund activism. In a mid-year review of 2016, the publication noted that activist hedge funds have nearly doubled over the last five years.
“I think it [activist investing] is more popular, but we’ve been seeing more activist strategies over a number of years. I think part of this increase is just more awareness of the strategy now and more knowledge of what’s happening because things are much more public now, and funds are required to make regulatory filings that let people know what they’re doing,” said Hinton.
“Activist managers often felt like they had not made the move from passive investors to activist investors until they took some kind of action, whether releasing a press release proposing strategic changes at the company or submitting notice of director nominees for a proxy fight,” Hinton explained. “It was believed that an investor wasn’t an activist until the moment to try to influence management arose. What ValueAct showed us is that hedge funds need to be concerned with actions that occur before a specific event, such as internal discussions about what their strategy is with a particular investment or behind the scenes discussions with management. The game plan of silently acquiring shares under the auspices that you’re a passive investor until you take an affirmative step has been turned around after ValueAct. Now investors have to think about at what point discussions they have about possible strategies will reach the DOJ’s threshold for becoming an activist investor.”
The complete article, “The Hedge Fund LCD 2016 Mid-Year Review: Hedge Fund Activism Summary,” appeared in Hedge Fund Legal & Compliance Digest on August 19, 2016. (login required)