Table above shows the composition of the sample of hedge fund activism. There are 452
13D hedge fund activism filings between 1st January 2011 and 31st December 2013 on
various US publically traded targets. There are around 196 different hedge funds acquiring
companies within the time period. While 131 number of funds have invested in single
company and 21 funds in more than 3 target companies. Hedge funds such as Discovery
Group, Icahn, Starboard Value and Stilwell Value have invested in more than 10 target
companies during the time period. There are 45 target companies which were acquired
by 2 or more hedge funds in the same duration. One important observation is that of the
400 companies less than 10 companies are featured in the…show more content… About 11% of the funds demand a board seat and about
4% seek business and financial restructuring. Some also pursue alternative goals such as
seeking or opposing a merger or acquisition. Many funds also contact board directly by
writing letters to the board.
The companies have been divided with respect to their Standard Industrial Classification
(SIC). SIC is a 4 digit code given to firms based on their primary line of business and the
first 2 digits are considered for convenience. Table above classifies the firms based on
their first 2 digits of SIC Code. It is easier to evaluate manufacturing companies in terms
of performance and hedge fund activists tend to target these firms (one in three). Hedge
funds can also restructure the firms financially and structurally to improve the performance
if they consider the firm an underperforming firm.
2.4 Operating Performance
This section presents my findings of the operating parameters of the firms a year prior
and a year post activism. It is important to note that the operating parameters of 400
firms cover a wide range of the industries and size, and many parameters are very