Hedge fund activism, on the other hand, just tries to get a percentage of a company, enough to have strong voice and communicate with other institutional investors. Jointly with other shareholders the hedge fund tries to implement a turn in the management and decisions of the firm. When the market believes that the turn has been fulfilled and the equity soars, the hedge fund leaves the firm with a capital gain. A recent episode of this strategy is the battle sparked by the Children’s Investment Fund, for the control of ABN Amro. On this same story, Atticus, another hedge fund with a 1 per cent stake in Barclays, has requested the UK bank to drop its agreed bid for ABN Amro and is gathering with other shareholders to make sure that Barclays’ bid does not go through.

Hedge fund activism might be critized because of shortermism, but it is probably a better way to make sure that any dormant value in a company does not stays asleep. Probably a quicker way than private equity activity.