Hedge fund activism boosts target firm value post-financial crisis.
Hedge funds that actively push for changes in companies they invest in can improve the performance of those companies. A study looked at data from 2000 to 2013 and found that these activist hedge funds can increase the value and profit margin of their target firms by around 5%. After the financial crisis of 2007-2008, activism focused on improving the business strategy of companies showed the best results. Firms that were struggling financially also benefited from activism. Overall, companies targeted by activist hedge funds saw significant improvements in their value, profit margin, and investment within a year after the activism.