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Transcript of Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk &...
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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SPECIAL REPORT ON SHAREHOLDER ACTIVISM
AFTER THE STORM
Damien Park, Managing PartnerHedge Fund Solutions LLC
[email protected] 215-325-0514
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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About Hedge Fund Solutions, LLC
Activist Investing Specialists
Consulting
Investment Research
EducationInstitutional Investors | Public Companies
Catalyst Investment Research
Institutional Investors | Public Companies
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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.
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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
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8/9/2019 Special Report on Shareholder Activism: Presentation at Kaplan Fox Conference on "Recovery Risk & Returns"
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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.
212.339.0207
Damien J. Park
Managing [email protected]
215-325-0514
www.hedgerelations.com
Hedge Fund Solutions LLC