Activist hedge fund managers represent a small part of the $1.5 trillion hedge fund industry, yet the philosophy that drives them to earn above-average returns has caused a stir within the investment community and the corporate world. These types of managers are changing the investing landscapefrom banking and corporate finance to managementand Extreme Value Hedging tells the story of their rise to power in the United States and the spread of their influence around the globe.
Despite their well-publicized status, very little is truly known about activist hedge funds. But author Ronald Orol has a unique understanding of this world, and with Extreme Value Hedging, he shares his unparalleled insights on how the individuals behind these funds are bucking the traditionally passive investor approach by actively initiating change that will improve the share value of today's small, mid-size, and large corporations. Orol discusses everything from activist investor efforts to break up the clubby insider world of corporate boardrooms; to their deal-making or -breaking pressure tactics and courtroom battles.
Divided into three comprehensive parts, Extreme Value Hedging takes you inside a world that few have ever seen. Through the revelations and examples of those on the front lines of this movement, you'll quickly discover where activists are coming from and how they operate; how institutional investors work with or against activists; and what the future may hold for them in places such as Russia, South Korea, and Japan.
You'll hear from high-profile activist investors, such as Guy Wyser-Pratte, Ralph Whitworth, Lars Förberg, Phillip Goldstein, and Robert Chapman. With precision and clarity, Orol explains how the presence of activists is changing the way corporate directors and executives manage businesses and think about major deals.
Filled with distinct details of the emergence, development, and expansion of this discipline, Extreme Value Hedging provides you with an engaging account of how activist hedge fund managers are implementing innovative strategies to improve the shareholder value of target companies and achieve robust returns for their clients in the process.
Whether you want to learn how to profit from this alternative investment strategy or understand how activist investors continue to outperform the market, Extreme Value Hedging is the book for you.
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About the Author
RONALD D. OROL is a financial reporter for MarketWatch, where he reports on hedge funds, banking regulation, and also the Securities and Exchange Commission. Prior to MarketWatch, Orol spent seven years as a senior writer for The Deal and The Daily Deal, covering the activist hedge fund industry as well as other topics. He is also a commentator on BBC World Television, CNBC TV, CTV, and National Public Radio. In addition, Orol regularly organizes and moderates panels on hedge funds and banking regulation. Prior to his work at The Deal, he was a reporter with Dow Jones Newswires and the Washington correspondent at the Providence Journal. Before moving to Washington, Orol spent three years as a business and finance reporter for the Prague Post in the Czech Republic. While in Prague, he also reported for Southam Newspapers, the Montreal Gazette, and the Toronto Star on Eastern European privatization and the political transformation of the region. Orol earned his bachelor of journalism honors degree from Carleton University in Ottawa, and received a business and economics journalism master's degree from Boston University, where he graduated with distinction.
Table of Contents
Part One: From Raiders to Activists and Everything in Between 1
Chapter 1: Growth of Activism and Why Corporate Raiders Aren’t Around Anymore 3
Chapter 2: Nuts and Bolts: How Activists Became Who They Are Today 25
Chapter 3: The Pack: How Activists Are Working Together (But Not Offi cially) 53
Chapter 4: How Activists Use Litigation to Pursue Their Agenda 75
Chapter 5: Why Activists Target Certain Corporations and Leave Others Alone 89
Chapter 6: Overperked and Overpaid: The Impact of Activists on Executive Compensation 103
Chapter 7: Hedge Specialization: Good or Bad? 117
Chapter 8: Regulation and Activists: How the Securities and Exchange Commission Helps (or Hurts) Activists 135
Part Two: Institutional Investors and Activists 155
Chapter 9: Institutional Investors on Activist Hedge Funds: Love'em or Hate'em' 157
Chapter 10: Activists Taking on Large Corporations Must Have Institutional Support 163
Chapter 11: Institutions and Activist Hedge Funds: Breaking Up Deals Together Around the World 173
Chapter 12: Just Vote No and No and No Again 181
Chapter 13: Institutions Changing Corporate Bylaws so Activist Hedge Funds Can Get Down to Business 191
Chapter 14: Can’t Be Them? Then Fund Them 201
Chapter 15: Institutions Behaving Like Activist Hedge Fund Managers 209
Part Three: Activism 2.0 217
Chapter 16: Technology, Communications, and Activists: Gary Lutin, Eric Jackson, and Anne Faulk 219
Chapter 17: When Is an Activist Fund Really a Private Equity Fund, and What’s the Difference? 231
Chapter 18: Funds of Hedge Funds Stake Out Activists 247
Chapter 19: Distressed Investing: How Activist Managers Buy Debt and Provoke Companies 263
Chapter 20: Hedge Activists in Western Europe, Asia, and Canada 271
Chapter 21: East Meets West: Hedge Activism Goes Global to Emerging Markets 299
Chapter 22: Value Investing versus Activism: Which One Is Better? 319
Conclusion: Saturation or No Saturation? 333
About the Author 361