Weeding out hedge fund hype uncovers dirt
An interesting article on Hedge Funds and dirt
Hedge funds increasingly are pressuring executives to either shape things up or move on, but a study suggests that their demands aren't doing much to improve the financial health of the companies they target.
Researchers at New York University concluded that when hedge funds become involved businesses often see their profits drop, debt levels rise and assets remain around the same size. The stock prices tend to increase, however, which is just what hedge funds want--even if it does mean longer-term business prospects falter.
That's something to watch as hedge funds buy up stakes in companies and quickly move to make their demands known to management. Some want a say over executive pay, while others disagree with corporate spending. They often vie for board seats, influence or block mergers and acquisitions, and ask that more money be doled out to shareholders.
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