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Benedicte Gravrand, Opalesque London, reports on yesterday's hedge fund roundtable at the Edhec conference.
The roundtable's speakers agreed that activist investors should give special care to corporate governance, the relationship between all the stakeholders in a company, if they want to create value.
David Harding, founder of London-based Winton Capital Management, said the purpose of effective governance is (1) being able to make long term decisions; (2) being able to take long term views; (3) maintaining a healthy culture in organisations from the top-down.
Antonio Borges, chairman of the UK's Hedge Fund Standard Board, stated that financial markets had a central responsibility in corporate governance. He listed four shades of activist investing:
. Constructive - focused funds which buy stakes in companies and insists on changes, leading to capital gain;
. Friendly - mainly private equity-style funds which remove incompetent management and shareholders, rely on leverage;
. Hostile - hostile take of control has attracted controversy, although the funds have little power unless they carry the shareholders with them;
. Specialist - mainly event-driven hedge funds, which solve issues and problems, deal with takeover battles.
Paul Frentrop, head of corporate governance at APG Investments, a Dutch firm that works with pension funds, said that stock markets indeed function very well. I...................... To view our full article Click here
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