Topic Results: Hedge funds

July 31, 2019

Finding Friends is Hard: Long-Term Investors’ Relationship with Proxy Advisors, Activists and Private Equity Funds

Institutional investors are howling for US public companies to focus more on the long-term.[1]  This is unsurprising. Long-term focused companies produce significantly better results over time, reporting far greater revenue growth with less volatility, far higher levels of economic profit, and greater total return to shareholders.[2] So if you are holding stock for a long time, a […]

May 14, 2019

Short-term thinking forcing companies to delay IPOs, opt for dual-class shares: Governance expert

Yvan Allaire, executive chair at the Institute for Governance of Private and Public Organizations, joins BNN Bloomberg to discuss “quarterly capitalism” in light of WestJet CEO Ed Sims’ warning on the destruction it brings to long-term company plans. To watch this interview, please click here.  

August 20, 2018

Activist Hedge Funds Aren’t Good for Companies or Investors, So Why Do They Exist?

Activist hedge funds have become capital market and financial media darlings. The Economist famously called them “capitalism’s unlikely heroes” in a cover story, and the FT published an article saying we “should welcome” them. But they are utterly reviled by CEOs. And at best, their performance is ambiguous. The most comprehensive study of activist hedge fund performance that I have read […]

November 17, 2017

Pershing Square, Ackman and CP Rail: A Case of Successful ”Activism” ?

Pershing Square, an activist hedge fund owned and managed by William Ackman, began hostile maneuvers against the board of CP Rail in September 2011 and ended its association with CP in August 2016, having netted a profit of $2.6 billion for his fund. This Canadian saga, in many ways, an archetype of what hedge fund […]

September 8, 2017

Overreacting to dual class stock

Yvan Allaire has a great analysis of Dow Jones’ overreaction to Snapchat’s IPO and the dual class stock phenomenon in general: ”In July 2017, Dow Jones, goaded by the reaction to Snapchat having gone public with a class of shares without voting rights, announced that, after extensive consultation, it had decided to henceforth eliminate companies […]

June 12, 2017

On becoming an «activist board»… In the age of activist shareholders

After some 15 years of tweaking and polishing the theory and practice of “good” governance, perfectly independent board members remain surprise-prone, estranged from the goings-on in the company, partially informed and lacking the wherewithal to challenge management. No doubt that the legitimacy and credibility of boards have suffered as a result. In the current age, […]

January 28, 2017

The $100 million man

In an unexpected turn of events, the Canadian Pacific Railway announced the early retirement of its CEO Hunter Harrison a few minutes before the conference call planned for the analysts on January 18. Harrison thus forfeited all benefits and perquisites he was entitled to receive from CP, including his pension, and has agreed to surrender […]

January 11, 2017

Corporate Governance: The New Paradigm

[ … ] a growing body of academic research has confirmed that short-term financial activists are a major contributor to systemic short-termism in managing businesses and investments. The notion that activist attacks increase, rather than undermine, long-term value creation has been resoundingly discredited. Economists Yvan Allaire and François Dauphin, for example, demonstrated in a series […]

December 23, 2016

Pershing Square, Ackman and CP Rail: A Case of Successful «Activism»?

Pershing Square, an activist hedge fund owned and managed by William Ackman, began hostile maneuvers against the board of CP Rail in September 2011 and ended its association with CP in August 2016, having netted a profit of $2.6 billion for his fund. This Canadian saga, in many ways, an archetype of what hedge fund […]

December 23, 2016

A «Successful» Case of Activism at the Canadian Pacific Railway: Lessons in Corporate Governance

Pershing Square Capital Management, an activist hedge fund owned and managed by William Ackman, began hostile maneuvers against the board of CP Rail in September 2011 and ended its association with CP in August 2016, having netted a profit of $2.6 billion for his fund. This Canadian saga, in many ways, an archetype of what […]

November 18, 2016

Can America’s Companies Survive America’s Most Aggressive Investors?

“WILMINGTON, Del.—Ron Ozer was thrilled to get a job with DuPont, the two-centuries-old chemical company, when he finished his Ph.D. from Cornell in 1990. It was the place to go for young, ambitious chemists; it offered salary and benefits so generous that some people called it “Uncle Dupey.” For 26 years, he invented things for […]

November 18, 2016

IGOPP’s Executive Chair quoted in The Atlantic Magazine with regard to Hedge Fund Activism

IGOPP’s Executive Chair, Dr. Yvan Allaire’s study on Hedge funds Activism Hedge Fund Activism: Preliminary Results and Some New Empirical Evidence, is quoted in a recent article entitled “Can America’s Companies Survive America’s Most Aggressive Investors?” published in the Atlantic Magazine. This article discusses activist investors who are increasingly gaining control of legacy corporations, forcing them to trim payrolls […]

April 27, 2016

Activist hedge funds come to Japan

From Japan Today comes an interesting column by Yvan Allaire and Francois Dauphin: Now foreign investors, holding over 30% of their shares, are unrelenting in their pressure for Japanese companies to adopt American-style governance. New governance codes have been written and Japanese stock exchanges are pushing for their implementation. Foreign money managers and institutional investors […]

January 26, 2016

Hedge Fund Activism: A Guide for the Perplexed

The message of the Dow/DuPont merger and split up is simple: No firm is today “too big to target.” Activists can see the transaction as evidence that, even in the rare case where they lose a proxy fight (as they did at DuPont last year in a squeaker), the handwriting is still on the wall, […]

December 8, 2015

Is 2015, Like 1985, an Inflection Year?

In an October 2015 post, I posed the question: Will a New Paradigm for Corporate Governance Bring Peace to the Thirty Years’ War? As we approach the end of 2015, I thought it would be useful to note some of the most cogent recent developments on which the need, and hope, for a new paradigm […]

November 9, 2015

The game of “activist” hedge funds: Cui bono?

This article aims to describe the contemporary objectives and tactics of activist hedge funds as well as the actions taken by the targeted companies as a result of their intervention. In this research, we explore the consequences of activism over time (impact on operational performance and share price returns) and compare these with a random sample of firms […]