special report on shareholder activism: presentation at kaplan fox conference on "recovery risk &...

8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"

1/12

SPECIAL REPORT ON SHAREHOLDER ACTIVISM

AFTER THE STORM

Damien Park, Managing PartnerHedge Fund Solutions LLC

[email protected] 215-325-0514


2/12

Discussion Topics

I. Quick Review: About HFS

II. The Shareholder Activism Report/Portal

a. Why Activist Investing Works

b. Activist Funds Today

c. Economic, Political & Regulatory Environment

d. What to Expect: 2010 & Beyond

III. Questions & Answers


3/12

About Hedge Fund Solutions, LLC

Activist Investing Specialists

Consulting

Investment Research

EducationInstitutional Investors | Public Companies

Catalyst Investment Research

Institutional Investors | Public Companies


4/12

Catalyst Investment Research

Daily RoundupMorning Email Alerts

FREE Weekly Activist ResearchCatalyst Equity Research Report

Company Specific: Deep Value + Activist CatalystCatalyst Investment Research Report

Special ReportsUncovering Hidden Value

Quarterly Buying AnalysisTop 50 Activists

The Shareholder Activism Report &Shareholder Activism Resource Portal


5/12

The Shareholder Activism Report

Featuring 400+ Pages on

Recommendations from TCBs Expert Committee on Shareholder Activism

Analysis of the economic, political and regulatory environment in the context ofshareholder activism

In-depth review of how to Understand Shareholders,Assess Value Gaps & Exposures, and

Manage Engagement Strategies

Benchmark studies on board member and executive

compensation

Comprehensive directory of over 400 activists

Top 50 activist investor profiles

Detailed proxy contest case studies from 2009 Much more


6/12

Why Activist Investing Works

Does Activism Increase Shareowner Returns?

NYU Study: Stock prices of companies targeted by activistinvestors earn 10.2% average returns during theperiod surrounding an activists ownership

disclosure and an additional 11.4% abnormal

return during the following 12 months.

IRRC Study: Companies in which activists gained board seats

outperformed by 1660 basis points (16.6%) fromthe date of the contest through a year after

election date.


7/12

Why Activist Investing Works

Activist investing works on both alpha and residual r Alpha through security selection

Implementation tries to create unexpected good newsto make [r] positive

Causes market to focus on what activist sees incompany

Raises possibility of value realization

Results in market re-rating as possible value realizationbecomes investment thesis

Source: Effectiveness of Hybrid Boardswww.irrcinstitute.org

What is Excess Return?ALPHA + RESIDUAL


8/12

Activist Funds Today

Activist Hedge Funds:

2009 was a year for activist funds to restructure, rebalance, rebuild and

refocus

New marketing campaigns to raise capital and create awareness areunderway

Recent examples of resurgence (Spotlight Advisors, Barington Capital,

Riley Investment Management, new activists)

Hybrid Funds Private + Public Equity: Active value carve-outs from larger PE funds

Increasing number of private equity funds filing 13Ds

Improved M&A environment will position PE as white knight once again

Traditionally Passive Funds: Increased level of active involvement: Governance, Director &

Management Compensation, CEO Succession, Transactions, etc


9/12

Economic, Political & Regulatory Landscape

Economic Recovery:

Despite Dow 10,000+: Strong corporate balance sheets and accessiblecredit markets will drive activist efforts to return cash, boost dividend

payouts and examine strategic alternatives

Political/Regulatory Landscape:

Mid-term elections; Schumer & Dodd Bills; and the perception ofcorporate greed and malfeasance will continue to encourage activism

SEC is continuing to shift the balance of power out of the boardroom and

toward shareholders


10/12

New Regulatory Issues for Public Companies

Enhanced Disclosure: Director Qualifications & Diversity, RiskOversight, Compensations Consultants,

Election Voting Results

Director Nominations: Shareholder Access to Corporate Proxymaterials, also referred to as Proxy

Access

Director Nominations: Rounding out Short Slate Solicitations

Director Elections: Rule 452 Broker Vote Rule (combinedwith majority voting and e-proxy)

Risk Disclosure: Overseeing Risk

Shareholder Proposals: CEO Succession Planning & RiskAssessment

Economic, Political & Regulatory Landscape Continued


11/12

What to Expect: 2010 & Beyond

Acceleration of (traditionally passive) institutional investor activism

More disclosure, uncertainty and complexity for public companies

Return of M&A and balance sheet activism

Better qualified dissident nominees (former CEOs and industry experts)

Improved activist campaigns (greater details for improving performance)

New and reconstituted players

Emergence of shareholder dialogue best practice


12/12

Given the dramatic changes taking place in the corporate governancelandscape, this is a timely publication worthy of the attention ofdirectors, officers, and investors.

James C. MorphyManaging Partner

Sullivan & Cromwell LLP

Important reading for corporate directors and those who advise them.

David KatzCorporate Partner

Wachtell, Lipton, Rosen & Katz

A very comprehensive set of resources, including battle-testedrecommendations that will prove invaluable for both companies andinvestors.

Arthur Crozier

Co-ChairmanInnisfree M&A Incorporated

A timely and comprehensive analysis that should promote rationaldiscourse and reduce the fear factor.

John C. WilcoxChairman, Sodali

Former Head of Corporate Governance, TIAA-CREF

Contact Timothy Concannon to learnmore and to schedule a free webinar

showcasing The Shareholder ActivismResource Portal.

[email protected]

212.339.0207

Damien J. Park

Managing [email protected]

215-325-0514

www.hedgerelations.com

Hedge Fund Solutions LLC

special report on shareholder activism: presentation at kaplan fox conference on "recovery risk &...

Documents