In the EU as well as in the states, hedge funds with large investment stakes in companies are increasingly taking a strong hand in running the show, according to a recent Reuters article that speeks to alternative investment man in the know, Sid Shamnath of Titanium Capital. But this growing assertion og authority doesn't always lead to warm relations:

Via Reuters:

Hedge fund activism seen rising

April 6, 2006
Reuters

Powerful hedge fund investors will increasingly seek a bigger say in the running of companies they invest in, says Sid Shamnath, an investment manager for Titanium Capital. Shamnath, a manager of Titanium's Global Event Driven Arbitrage Fund, said on Wednesday some of the large hedge funds had less freedom than their smaller rivals to take and exit positions and so needed to take a longer term view of their investments, prompting greater interest in company strategy.

"Large funds, like those managing something like 4 billion dollars, need to take a longer-term view ... and need longer lock-up periods for investors," Shamnath said at the Reuters Hedge Funds and Private Equity Summit in London...

...Some relationships between companies and hedge funds have already turned sour. The Children's Investment Fund, for example, helped orchestrate the removal of Deutsche Boerse's chairman Rolf Breuer and chief executive Werner Seifert to register their disapproval of the Frankfurt bourse operator's attempt to buy the London Stock Exchange.

Brian Magnus, co-head of UK Investment Banking at Morgan Stanley, said shareholder activism was a "weathervane of the state and maturity of capital markets". "Shareholder activism had been confined to the UK alone until not very long ago. Now we're seeing it across Europe, in Germany, even Italy," Magnus told the Reuters Summit.

More here.

-- MDT

Labels: Morgan Stanley