Do Activists Align with Larger Mutual Funds?
79 Pages Posted: 29 Dec 2020 Last revised: 18 Aug 2023
Date Written: October 26, 2020
I use supervised machine learning to estimate the preferences of mutual fund families based on their proxy voting choices. I find that hedge fund activist campaigns are more closely aligned with the preferences of mutual fund families that own a larger portion of the target firm. The positive association between larger mutual fund family preference and activist communication increases as activists mature. Campaigns with a higher positive association between larger mutual fund family preference and activist communication enjoy improved shareholder attention, more votes, and a greater likelihood of success. These findings suggest that activism may help push shareholders' implicit agendas.
Keywords: Hedge Fund Activism, Shareholder Preferences, Text Analysis, Machine Learning
JEL Classification: G23, G32, G34
Suggested Citation: Suggested Citation