Hedge fund headlines, in brief
Fighting fire with fire. Hedge funds have long realized the power of the Web to communicate and advocate directly to investors, the media and other audiences. Indeed, the range of tools available to activists and others seeking to influence perception about companies and issues in the marketplace expands by the day. I am sure that social media will soon be an arrow in the activist quiver. Companies, however are hardly standing still. Companies are launching charm offensives in order to maintain close relations with their institutional shareholders. In taking another page from the activist playbook, Herbalife has registered Internet domain names like TheRealBillAckman.com and BillAckman.net. Ackman’s fund, Pershing Square, maintains FactsAboutHerbalife.com which documents the reasoning behind his reported $1 billion short on Herbalife. While these Web sites, currently blank, are not likely to factor prominently in Herbalife’s defensive campaign, I do think that this counter-registering of domains is a first.
Activists tap into the oil patch. A growing number of energy companies are coming under pressure as hedge funds agitate for more growth, better stock performance and larger dividends, reports the Wall Street Journal. Hess, where Elliott Management is nominating five directors to the company’s board, is the latest target. IR and PR has never been the strength of oil companies, so this sector could be particularly vulnerable to pressure from activists. More broadly, though, this trend could signal hedge funds’ willingness to target increasingly large, global companies and companies in complex, engineering- and technology-intensive fields. Elliott cites Hess’ “crown jewel” assets in the Gulf of Mexico, North Sea and West Africa as “very long-life assets” that contribute to the “intrinsic value” of $126 per share it assigns to Hess. Presumably, these assets are in deep water, which amplify the capital requirements, time horizon and risk inherent to oil exploration. Elliott does not seem deterred.