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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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.
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