Proof of Concept

The success of shareholder activism as an investment strategy is well documented. Studies from some of the top universities in the country have found similar conclusions. A 2009 Harvard Business School study entitled Investor Activism and Takeovers studied activist SEC filings between 1993 and 2006 and found a 10.3% excess return in the 18 months commencing one month prior to a 13D filing, with a “large portion of these returns accrue[ing] in the [+3 months, +18 months] Window” and “only a modest portion come[ing] from the period around announcement . . .” Similarly, in a 2009 study conducted by NYU entitled Entrepreneurial Shareholder Activism: Hedge Funds and Other Private Investors found that in hedge fund activism, there was a 10.2% abnormal stock returns during the period surrounding the initial Schedule 13D filing and an additional 11.4% abnormal return during the subsequent year. Studies with similar results were conducted by Duke University, Northeastern University and the University of Kentucky (see Activist Studies tab).

This is consistent with the data that 13D Monitor has compiled¹. Between April 1, 2006 and February 28, 2011, the 565 13D situations that 13D Monitor reported on had an average annualized return of 22.2% (versus an annualized average return for the S&P500² of 3.7%) and the 188 13D situations above $1B market cap. that 13D Monitor reported on had an average annualized return of 22.6% (versus an annualized average return for the S&P500 of 4.1%). For more 13D Monitor data, including 13D Monitor data after February 2011, go to www.13DMonitor.com.