CEOs open their boardrooms to activist hedge funds to keep others out

Large, institutional investors are also getting in on the trend. Ashland Global had been battling the hedge fund Cruiser Capital Advisors, which was seeking four seats on the chemical company’s board. Neuberger Berman, another investor, swooped in a few weeks ago and made a separate deal to add two fresh directors to the board. Charles Kantor, a senior portfolio manager at Neuberger Berman, told The Wall Street Journal, “The goal here was to try and put this to bed.”

For years, several hedge funds have preferred the moniker “constructivist” to that of “activist.” The difference, they say, is that a constructivist will advise management privately behind the scenes, rather than seek public fights. ValueAct, founded by Jeff Ubben, and Blue Harbour, led by Clifton Robbins, are often categorized as such.

Lately, though it’s a broader array of activists as “white squires” that are moving up on the list of tools used to defend corporations against an unwanted invader, according to advisors who work in that world. In addition to the public examples this year, there are several others that are currently in the works behind the scenes, people with knowledge of those situations said.

But, at the end of the day, it’s important for companies to know who they’re cozying up to.

“Even though there’s an overlap of what the company wants and the shareholder wants, the time frame in most cases is different, Lazard’s Rossman said. “Companies have a longer-term view of their time frame, shareholders typically have a shorter term. You have to be cognizant of a shorter-term time; you can’t be naive.”

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