Hedge funds put Greenwich, a small town in Connecticut on the world map. The industry effectively made the Southern Connecticut area code synonymous with hedge funds.

Now the town is learning what happens when hedge funds don’t get it right. During a recent visit, Reuters reporter Joe Giannone found out that things aren’t quite what they used to be.

The luxury car dealers are quiet, the prices of mansions are declining and the retailers who have made a good living serving its wealthy residents are complaining about a sudden drop in business, Giannone writes.

It’s all relative though. Roxana Bowgen, an estate agent at Engel & Volker, an international broker of high-end properties, tells Giannone that houses are still selling, just at a slower pace. “There are fewer people buying $10 million, $20 million homes. We’re seeing an adjustment, a correction taking place,” she said.

(Photo credit: Mike Segar, Reuters)

What you say to an activist shareholder can and will be used against you in a court of law. 
 
That was one of the messages from panelists at the Tulane’s Corporate Law Institute conference in New Orleans on Thursday.
 
Speaking about activist shareholders on a panel titled “Barbarians at the Ballot Box,” Joele Frank — PR guru and founder of Joele Frank, Wilkinson Brimmer Katcher  — warned people: “If someone with a 203 area code calls you, call them back very carefully.” The 203 area code refers to a part of Connecticut rich with hedge funds.
 
“Whatever you say to an activist can and will be used against you in a 13D filing to the SEC,” Frank said.
 
The panelists also discussed the cautionary tale of Embarcadero Technologies, whose chief financial officer once used expletives in conversation with activist Robert Chapman. Chapman, who said it was “inappropriate and inadvisable” to use such “blasphemy to a shareholder who owns 9.3 percent of your company,” went on to quote the CFO in a 13D filing.
 
Chapman Capital went on to demand that Embarcadero’s board of directors maximize shareholder value via a change-of-control transaction, essentially asking for an immediate sale.
 
Also of interest were the dynamics between two panelists who had squared off against each other just last year. Roy Katzovicz, general counsel for Pershing Square Capital Management, was on the panel. Pershing Square had opposed the sale of Ceridian Corp to Thomas H Lee Partners and Fidelity National Financial. Ceridian had hired Frank’s firm.
 
Earlier in the day, Mark Shafir, co-head of global M&A for Lehman Brothers, said investor activism was on the rise and predicted an increase in hostile activity in the coming months. 
 
Activist investors take positions in companies they think are underperforming and call for change, often including a sale of all or part of the company to increase shareholder value. If they feel their concerns are unheard, they can go further by nominating their own director candidates in a proxy fight. Chris Young of RiskMetrics, also on the panel, described them as “value investors on steroids.”

(Reporting by Jui Chakravorty)