London-based hedge fund The Children's Investment Fund has sold its position in railroad operator CSX and will resign the board seat it gained after a long court battle last year. This "defeat" for TCI demonstrates the difficulty investors of all stripes, even the most sophisticated and deep-pocketed, have in advocating change at traded companies.
BreakingViews writes, "the top brass at CSX demonstrated an unwillingness to take criticism or suggestions from a substantial shareholder — the kind of parochial response that other investors should find worrying." Agreed.
However, BreakingViews goes on to say "if hedge fund activism is indeed on the wane, then shareholders looking for a more enduring advocate for their interests may need to do the job themselves. Come to think of it, that wouldn’t be such a bad outcome after all." Disagreed.
If hedge funds cannot be effective activists, how in the world can anyone on Main Street be an effective voice for change? What are individuals supposed to do? Show up at annual meetings and grab the microphone? Yeah, right.
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