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Saturday, June 24, 2017
13D Activist Fund

Shareholder Activism as an Investment Strategy

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 accru[ing] in the [+3 months, +18 months] Window” and “only a modest portion com[ing] from the period around announcement . . .” Similarly, 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.

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&P 500 2 of 3.7%) and the 188 13D situations above $1 billion market capitalization that 13D Monitor reported on had an average annualized return of 22.6% (versus an annualized average return for the S&P 500 of 4.1%).


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1 For each filing, 13D Monitor reviewed the closing price on the day prior to the 13D following, the closing price on the day following the 13D filing, the filing date, the date the 13D filing obligation ended and the closing price on that date. Past performance does not guarantee future results. Performance data provided does not represent that of the Fund.

2 The S&P 500® is regarded as a gauge of large cap U.S. equities. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities.