"I've got to be like a bulldog," says Philip Goldstein, hedge fund manager and shareholder activist. "Fund company mangers may call me vexacious . . . but it doesn't bother me. I've got thick skin, and I'm going to continue to fight for shareholders' rights. Management thinks of themselves as lords and shareholders as serfs, but shareholders are the ones who actually own a fund," Goldstein adds with a gleam in his eye. "They hate annoying shareholders like me."

Goldstein, 54, president of Opportunity Partners of Pleasantville, N.Y., is known for taking fund management to court over a variety of issues -- frequently over what Goldstein views as management's failure to disclose ramifications of shareholder votes; suppression of shareholders' rights to express their opinions on Internet bulletin boards; shareholders' rights to propose new fund directors; and shareholders' rights to decide on various issues through separate proxy votes as opposed to a single vote that makes one decision contingent upon another (MFMN, July 26).

A former civil engineer for the City of New York, Goldstein has a mind for details and can recount, with a fair amount of mirth and overwhelming detail, nuances of the five courtroom arguments he has won and lost. The former Brooklyn native is also outspoken and seems to revel in the hoopla he has so frequently caused.

Fund managers are not amused. They say Goldstein is no shareholder activist but actually a self-interested arbitrageur who runs to court to open closed-end funds for his own profit and who has cost fellow shareholders millions of dollars in legal fees. Goldstein admits he rarely holds on to formerly closed-end funds once they open but says it is not the money but the principle of shareholder rights he fights for. "I put my heart and soul [in these cases]. I really believe in shareholder democracy," he says.

What's behind Goldstein's litigious nature is usually his desire to open-end a closed-end fund in which he is invested. Goldstein's eight-year-old, $32 million hedge fund primarily invests in closed-end funds. Goldstein said he invests in these specialized instruments because he can buy them at discount.

After buying into such a fund, Goldstein immerses himself in the fund's investment strategy and gets to know its management and shareholders, all to map out a strategy to bring the discounted fund up to net asset value so he can cash out.

Goldstein says he has been investing in closed-end funds for 25 years, since he was 29 and first read about them. He claims he is usually successful at bringing these discounted funds up to net asset value, although he has found closed-end funds to open-end only about 10 percent of the time. Thus, he tries a variety of means to bring a closed-end fund to net asset value -- "by opening, by liquidating, by issuing a self-tender offer or by buying back shares to put upward pressure on market price," he explains.

Goldstein likens these tactics to playing poker and said he spends only 30 percent of his time actually investing and 70 percent of his time on strategizing and shareholder activism.

The rough-at-the-edges arbitrageur said he is no market genius. He likened investing in discounted, closed-end funds to "investing for dummies" and called himself a "bottom fisher."

Maybe so, but fund companies may wish he'd cast his net elsewhere.

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