This might be ignorant, but I was looking at a hedge funds portfolio and they have big holding in two companies in the microprocessor sector. If the hedge funds ownership can lead to direction of the companies boards activities, isn’t there a danger of them doing things that favor one company over another?
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Hahahaha. You should go over to r/superstonk. It’s a looong rabbit hole; TLDR: the stock market is completely fraudulent, and nobody is being punished.
It is not common that hedge funds hold big positions in directly competing companies. You might think that a billion dollar position is a major holding but in a trillion dollar company it is not and the hedge fund have essentially no power. However even when this is the case the hedge funds interest is to their own profit and not to one or the other company. They want to vote for policies that increase the total profit of their holdings. And this generally benefit the shareholders that hold stock in just one of the companies as well. Both companies make more money by working together rather then competing. It is up to the other shareholders, especially those in the board of directors, to make sure that everything is legal and in the best interest of all the shareholders. If there is any illegal conflicts of interest then they can take action against it.
So the big investment firms like say Vanguard or Blackrock own massive amounts of shares in like every single public company. However they have to make decisions that are in the best interest of their customers (who technically are the owners of the shares). A board member likewise needs to make decisions in the best interests of the company they are in the board of.
In other words. This isn’t really an issue in practical terms. There’s almost certainly some shenanigans that have happened, but that would be the exception. In the end the best interests of the shareholders is that the companies make more money, so their stock value increases.
As others have said, they don’t really have say in how these companies are run so it’s not a conflict.
But far more importantly, one companies success is not their competitors failure. This is especially true with microprocessors which probably always have some artificial barriers to keep it from becoming a monopoly. Intel cannot squash AMD even though they could probably leverage their vast wealth and influence to do so. The courts caught them the first couple times they tried, and Intel would probably be broken up if it ever happened fully.
And from a practical perspective, they can coexist for a long time with a constantly growing market for components, even if it has some ebb and flow.
Source: I worked for AMD and, while not involved in government regulations, I paid attention in more than one presentation.
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