Ross perot hedge fund liquidating
However, Delaware courts generally upheld the board’s decision to pay greenmail, on the grounds that it was a reasonable response by the board to the threat of an abusive or coercive hostile takeover.Nevertheless, there was widespread outcry about the practice from target companies, institutional investors and the investing public.
Hushmail in the Age of Activist Investing Although greenmail has largely disappeared in the hostile takeover arena, the recent explosion of activist investing by hedge funds has brought about a related phenomenon, which can be referred to as “hushmail.” Texas businessman H.This practice was referred to as “greenmail,” and some corporate raiders found greenmail easier, and more profitable, than the hostile takeover itself.Some of the boards of directors of the target companies that paid greenmailers were sued by their stockholders, who alleged that the payments were made for the purpose of management entrenchment, the boards impermissibly favored the greenmailers over other stockholders and the price paid was excessive.“Other guys were in similar trades but they didn’t have the backup and were levered more than we were,” he told The Post.Indeed, several of Treue’s bigger name competitors, including the founder of LTCM, John Meriwether, have closed shop or locked down their funds as a result of recent economic events. Increasingly, some activist hedge funds are looking to sell their stock positions back to target companies. The Rise and Fall of Greenmail During the heyday of takeovers in the 1980s, so-called corporate raiders would often amass a sizable stock position in a target company, and then threaten or commence a hostile offer for the company.
This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.
Ross Perot coined the term in 1986, using it to describe an offer made to him by General Motors to buy out his GM stock at a premium price, in exchange for his agreement to stop publicly criticizing GM’s management.
Activist hedge funds often start their campaigns against public company targets by taking large stock positions and then publicly agitating for changes, such as stock repurchases, extraordinary dividends, dispositions of non-core businesses or an outright sale of the company.
The fund charges far less than the industry standard with a management fee of just 1 percent of assets topped by a 15 percent cut of profits.
Most hedge fundscharge 2 percent of assets and 20 percent of profits.
Treue says that unlike the typical hedge fund, which makes money on 20 percent fees, he and his staff make far more money from the fund’s returns, thus aligning their interests with investors.