The Value of Activism: A Hedge Fund Investor's Perspective
35 Pages Posted: 12 May 2018
Date Written: April 30, 2018
Using a novel and comprehensive dataset, we examine the return from activism compared to the return the same activist hedge fund generates from its non-activism equity investments. On average, targets do not outperform or under-perform non-targets within the same fund. Out-performance is observed, however, in the first three months of intervention and in particular when the activist hedge fund has had prior intervention experience or is more familiar with the target firm’s industry. The evidence suggests that activist hedge funds are under-investing in activism. Our paper provides fresh insight into the value of hedge fund activism by considering it from the perspective of activist hedge funds’ own investors.
Keywords: hedge fund, shareholder activism, portfolio analysis
JEL Classification: G23, G11, G14
Suggested Citation: Suggested Citation