The Value of Activism: A Hedge Fund Investor's Perspective

35 Pages Posted: 12 May 2018  

Felix Zhiyu Feng

University of Notre Dame

Chengdong Yin

Purdue University - Krannert School of Management

Caroline Zhu

University of Oklahoma

Date Written: April 30, 2018

Abstract

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

Feng, Felix Zhiyu and Yin, Chengdong and Zhu, Caroline, The Value of Activism: A Hedge Fund Investor's Perspective (April 30, 2018). Available at SSRN: https://ssrn.com/abstract=3158826 or http://dx.doi.org/10.2139/ssrn.3158826

Zhiyu Feng (Contact Author)

University of Notre Dame ( email )

3079 Jenkins-Nanovic
Notre Dame, IN 46556
United States
(574)631-0428 (Phone)

HOME PAGE: http://felixzhiyufeng.weebly.com/

Chengdong Yin

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Caroline Zhu

University of Oklahoma ( email )

307 W Brooks
Norman, OK 73019
United States

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