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Archive for January, 2014

What to include in a hedge fund campaign letter: an example

January 18, 2014 Leave a comment

I include in this post a very short comment on an activist campaign led by hedge fund Starboard Value LP, the biggest shareholder in the target company, Wasau Paper Corp.,  with more than 15% of outstanding common stock.

Should we consider the arguments are correct, the letter addressed by the hedge fund to the company board and management includes many of this kind of campaign`s topics, and is also a manual of easy to improve management habits, such as: Read more…

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Should we favor long-term shareholders? How?

January 2, 2014 1 comment

The Generation Foundation teamed with Mercer and Stikeman Elliot LLP in 2013, in order to do research on what investors and issuers thought about the possibility that loyalty-driven securities could be used as a tool to favor long-term shareholders, with the final aim that society as a whole could avoid the negative effects of short-termism that we would here take as granted. (1)

This was one in five elements previously identified in their article “Sustainable Capitalism”.(2) The new study finds out that the idea is mostly understood but rejected, in favor of some other alternatives to reward patient capitalists.

Some measures that have been proposed (some of them are already applied in France or the Netherlands) include:

–         Shareholder political rights: limiting access or reduce rights of short-term investors; or increasing those of long-term ones, with multiple voting rights that vest in time, or L-shares, (warrants that vest in time and give the right to purchase at a certain price a certain number of shares).

–         Economic rights: financial rewards to long–term shareholders , (for example additional dividends, or bonus shares).

–         Tax breaks or subsidies, (although those escape from the firm`s control, so the study doesn`t focus on it). Read more…