The Conference Board’s Working Group on Hedge Fund Activism, established in May 2007, recently released a set of proposed recommendations for those public companies and institutional investors who might find themselves involved in an activism campaign mounted by hedge funds.
The proposed recommendations are supported by a white paper discussing the Working Group’s findings.
The Working Group focused on the following areas:
- What corporations can do to better monitor securities holdings and learn about those accumulations of stock or extraordinary trading patterns that may reveal a hedge fund’s activism tactic.
- What measures corporations can adopt to avoid becoming a target.
- How boards and senior executives can react to an activism campaign and how they should respond to requests for change made by hedge funds.
- How companies and large institutional investors can ensure integrity of the voting process in those situations where hedge funds borrow shares for the sole purpose of influencing a shareholders’ vote.
- What considerations institutional investors should be mindful of when allocating some of their assets to hedge funds pursuing activism strategies.
The paper is available here.