Money managers under the microscope
Activist investors have traditionally been kept at arm’s length by the mainstream fund houses. Fund managers at the major players haven’t felt able to align themselves with those agitating for change for fear their cosy chats with company chairmen might be compromised.
There are clear signs though that the mood has shifted.
Not only are institutions getting rapped over the knuckles for failing to apply active ownership principles, but the credit crisis has purged short-termist activists from the market, helping to soften the sector’s association with financial engineering and slash-n-burn tactics.
Of course, mainstream houses have always afforded themselves some measure of collaboration; they just did it well away from the public gaze and in the UK were careful not to fall foul of so-called ‘acting in concert’ rules which limited the conversations shareholders could have with activists. The activist funds, after all, effectively create their own insider information while planning a campaign.
David Walker’s review of the reasons behind the near-collapse of the banking system, however, has urged clarification of those rules with a view to smoothing the path to collective action.