Shareholder Primacy How activists and companies make life hard for each other
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Jun 11, 2025 The hosts humorously discuss the contrasting climates of New Orleans and Colorado before diving into the intense dynamics between activists and companies. They examine clever strategies both sides employ, showcasing legal implications and challenges. The dialogue reveals insights on closed-end funds, activist investors' tactics, and corporate governance struggles. With a focus on WEX, the episode highlights the tension between shareholder dissatisfaction and corporate management, illustrating how effective communication can drive meaningful change.
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Closed-End Fund Trading Explained
- Closed-end funds trade on exchanges between investors, unlike open-end funds which trade directly with the fund.
- This means closed-end funds' share prices often differ significantly from the value of their underlying assets.
Closed-End Funds Trade at Discount
- Closed-end funds frequently trade at a discount to their net asset value, unlike ETFs or open-end funds.
- Activists often target these discounts by pushing for fund liquidation or buybacks to close the gap and boost value.
Funds Use Takeover Defenses
- Some closed-end funds adopt takeover defenses like poison pills and control share acquisition bylaws to frustrate activists.
- These tactics can create non-voting shares or require supermajorities for director election to dilute activist influence.