Long/short equity and credit hedge funds look for mispriced securities with potential catalysts that might change their market prices.īut activist hedge funds create their own catalysts by winning ownership and influence and persuading others to enact the changes they want to see.
The main downside is that you might have to clarify what type of “activist” you are – so that you don’t get mobbed by an angry crowd burning down buildings or sociopaths screaming at each other on Twitter: What is an Activist Hedge Fund?Īctivist Hedge Fund Definition: An activist hedge fund accumulates sizable stakes in companies to gain operational/financial influence and persuades Boards and management teams to enact their desired changes they profit based on increases in companies’ stock prices after these changes take place.Īctivist hedge funds are usually classified as “event-driven” within hedge fund strategies, and for good reason. If you can win an offer at an activist fund, you’ll arguably get some of the most interesting work in the industry. Similar to private equity firms, they operate on longer time frames, influence companies’ operations and finances, and might catalyze major changes, such as spin-offs or acquisitions.Īnd similar to long/short equity hedge funds, they target undervalued and misunderstood companies and profit when the rest of the market catches up. If you’re thinking about exit opportunities and can’t decide between private equity and hedge funds, activist hedge funds might be your solution.
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