We examine recent confrontational activism campaigns by hedge funds and other
private investors. The main parallels between the groups are a significantly positive
market reaction for the target firm around the initial Schedule 13D filing date,
significantly positive returns over the subsequent year, and the activist's high
success rate in achieving its original objective. Further, both activists frequently
gain board representation through real or threatened proxy solicitations. Two major
differences are that hedge funds target more profitable firms than other activists,
and hedge funds address cash flow agency costs whereas other private investors
change the target's investment strategies.