Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World

Preface

Almost every day now, this feisty group of investors are making themselves known to the chieftains of industry. In a one-year period, The Home Depot, General Motors, McDonald Motorola, Wendy's, and H. J. Heinz, as well as Volvo and the London Stock Exc h ange, have all become their targets.

I'm talking about activist hedge fund managers. This book tells the story of how these rebellious investors are shaking things up in the corporate world. In fact, they are prodding, pushing, agitating, and getting things done to improve the share value of large, small, and midsized corporations in the United States and around the globe. Chief Executive Officers (CEOs) are stepping down, boards are being shuffled, units are sold off, and there are multibillion-dollar mergers and acquisitions galore—all because of these pestering activist shareholders.

Unlike most other investment professionals, activist investors believe some companies are operating either at subpar levels or in consolidating industries. They buy large equity stakes, often spending millions of dollars to do so, and approach executives at these businesses to find ways to improve shareholder value. If discussions don't go well, activists will step up their efforts to stimulate change at corporations.

But their influence goes beyond each individual company they provoke into making changes. These investors are having a broader impact. Billion-dollar deals are not only being forged in large part because of activists, they ...