More Mutual Funds Adopt Shareholder Activist Tactics

Acting more like aggressive hedge funds, mutual funds are increasingly expressing their opinions about how the companies they own should be run, The Wall Street Journal reports. OppenheimerFunds’ rejection of the management at Take-Two Interactive Software is just the beginning of an new activist movement among mutual funds, although it is the first time in the company’s 46 years in business that it has wrangled with management.

But in the past month, T. Rowe Price Group, spoke out against a leveraged buyout of Laureate Education as well as the merger of two energy companies. And for some time now, Pzena Investment Management has been trying to stop Carl Icahn from acquiring Lear.

One of the reasons why funds may become more active is because they have had to disclose their proxies since 2004, and investors are beginning to take note of whether the funds are voting in shareholder’s—rather than management’s—best interests. Funds are also rivaling the returns of hedge funds, which often successfully shepherd the companies they own.

“They’ve taken note of the outsized returns of activist hedge funds,” said Christopher Young, who heads up M&A research at Institutional Shareholder Services, a proxy consultancy.

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