'Hedge Funds: Stock Pickers or Managers?

For decades, corporate managers have criticised analysts, fund managers, hedge fund managers and private equity professionals for telling them how to run their business, wihout having had the necessary experience. Now hedge fund activists are regularly suggesting operational decisions, and in some cases even in areas traditionally reserved for management. ‘Activism has gone from being frowned upon, something that marks you out as a rogue or maverick, to almost socially responsible.’1 These hedge funds may have become an accepted part of the governance universe but are they actually adding value? Recent studies have answered this question in the affirmative, but what if those companies picked out by hedge funds for their attention were already on their way to outperformance? The observed outperformance may not be due to a hedge fund’s ability to contribute to value creation but a mere reflection of their stock picking abilities. The difficulty is in identifying those companies that would have made typical hedge fund targets but which were not actually targeted, i.e. build an appropriate group of comparable companies. We have developed a statistical model to identify just these companies

Does the Early Bird Always get the Worm?

M&A can be motivated by many different things and it is not unnatural to believe that these motivations could be dependent on where we are in the M&A cycle. By extension if we believe that different motivations lead to different ‘success’ rates then there could be different success rates at different points in the cycle. This is the topic of this report. First movers have historically been feted for their strategic motivations in pursuing M&A and the advantages gained from moving early, such as the availability of attractive targets. In contrast, late followers have been characterised as firms that exemplify irrational behaviour as they are compelled by competitive pressures to mimic the actions of their rivals without a logical rationale for the motivations underlying the M&A announcement. We set out to test this simplistic view and in this report we tested the difference in performance between first movers and late followers using a sample of global M&A deals for two periods, Wave 1 (1990-2002) and Wave 2 (2003-2009). We found considerable evidence that this simplistic view may not be correct, with our so called ‘late followers’ at least as successful as the ‘first movers’. Before we highlight some relevant practical findings for practitioners we will also show that there may be something different about the latest M&A wave. There are certain features of this second wave (notably the prevalence of cross-border M&A) that may make first mover advantage less prevalent. In addition, insight from literature in other fields may be casting those first movers in a less unreservedly flattering light, which should give managements pause in their attempts to be the first to acquire. We conclude: - It’s not too late. If you find a compelling M&A opportunity but you feel others have invested in that area already, it’s not necessarily a bad thing. - Something’s changed in the latest wave The M&A market is becoming more about new geographies and opportunities, deals where the more you know before you proceed, the better. - M&A can and does add value Unavoidably, we looked at the data and saw a generally positive reaction to acquisitions, regardless of which end of the ‘wave’ we are at. And perhaps, judging by the positive reception given by the market to both our first movers and late followers, we must conclude that you don’t want to be caught in the middle. In M&A, unlike nature, the early bird may not always get the worm

Naked M&A Transactions: How the Lack of Local Expertise in Cross-Border Deals Can Negatively Affect Acquirer Performance - and How Informed Institutional Investors can Mitigate This Effect

This paper tests how informed investors with local expertise can affect cross-border deal success using a comprehensive dataset of corporate acquirers’ share registers. We posit that deals in which long-term investors have a high level of expertise in the target firm's region are more likely to perform better than if the deal is ‘naked’, i.e., when such regional expertise amongst the investors is low. We show that the strength of this effect depends upon an index of country-level M&A maturity which measures the relative divergence between acquirer and target countries. Specifically, we investigate whether acquirers investing in countries with low M&A maturity gain greater benefit from investors with regional expertise. We present evidence which confirms the hypothesis that acquirers in cross-border corporate transactions are more likely to be successful if the acquirer's investors have a higher level of expertise in the target region, and that this effect is strongest when the maturity for corporate transactions of the target country is low. This provides a specific setting which is consistent with earlier theoretical work that argues in general that information flows should not just be from firms to capital markets but also in the opposite direction, and that this flow of information is particularly important whenever information is dispersed

Comparison of physical composition of municipal solid waste in Czech municipalities and their potential in separation

Received: February 23rd, 2021 ; Accepted: May 2nd, 2021 ; Published: May 17th, 2021 ; Correspondence: [email protected] Republic has been moving from landfill-based waste system toward resourcebased waste management system with an increasing rate of recyclable waste in the last years (38.6% of recycling by material and 11.7% of energy recovery in 2018). However, landfill is still a popular way of mixed municipal solid waste (MMSW) disposal due to the low tax. In the Czech Republic, MMSW is collected from households by door-to-door system or recovery operations (Household Waste Recycling Centre) and only should consists of everyday items, which are further non-recyclable and non-reusable. However, a significant amount of recyclable waste can still be found in MMSW. Therefore, a good knowledge of the physical composition of MMSW is required to define strategy plans and improve waste management in municipalities. This work is aimed at comparing the physical composition of MMSW in the Czech Republic with small municipalities up to 2,999 inhabitants and big municipalities from 3,000 inhabitants to recognize the share of recyclable and non-recyclable waste in MSW and designate the potential of separation at source. Composition of MMSW was determined by a physical evaluation of waste collected from households in target municipalities which consists in a detailed manual sorting of waste into 13 specific groups according to their types, and weighting by a scale. We found that the real proportion of MMSW that could no longer be reused or recycled was much less than the amount disposed of in the municipal waste bins. A large part of MMSW consisted of organic waste together with food waste. This type of waste is especially useful when people turn it into compost to prevent the production of waste and it returns the nutrients back to the soil, closing the circle. The rate of recyclable waste was also high in many municipalities covered by our analyses, which indicated a lower rate of separation and reflected an insufficient sorting system in municipality and insufficient education of inhabitants. On the other hand, it points to the larger space of separation potential in households. In conclusion the evaluation emphasizes the improper proportion of MMSW in Czech municipalities. A lot of waste can be recycled but once it is thrown into black bins as MMSW, there is no chance that it will be reused/recycled. It therefore calls for measures to improve sorting at source, which will benefit municipal authorities in term of increasing recycle rates in order to comply with regulations and make a profit. We found the analysis of the physical composition of MMSW as a fundamental method for municipalities to verify the separation rate at the source, and it is recommended to conduct this analysis regularly and monitor developments