What are activist hedge funds?

Activist hedge funds are investors that purchase shares of companies to become active in a different way: they shake management with an aim to make the voice of shareholders heard more loudly. But, as activist hedge funds voice their concerns, we must ask: what are the long term financial and non-financial consequences?

What is a hedge fund's job?

A hedge fund’s job is to make money, bottom line. Over the last twenty years, hedge funds have actively entered the activist arena. Activist hedge funds make a large enough investment in a company to be able to participate in the management and firm decision making.

What is the difference between hedge fund activism and private equity?

In addition, the line between hedge fund activism and private equity continues to blur, with some activist funds becoming bidders themselves for all or part of a company, and a handful of private equity funds exploring activist-style investments in, and engagement with, public companies.

Are hedge funds passive?

Many hedge funds are passive in the sense that they invest in businesses and then wait for returns to arise over a given time period. In contrast to these more passive funds, activist hedge funds aim to invest in businesses and then take actions that boost the companies’ stock price before selling the shares for a profit soon afterwards.