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Activist investor heavyweights form new lobbying arm | Reuters

http://mobile.reuters.com/article/healthcareSector/idUSKCN0Y92YV

Activist investor heavyweights form new lobbying arm

[image: William Ackman, founder and CEO of hedge fund Pershing Square
Capital Management, speaks during the Sohn Investment Conference in New
York May 4, 2015. REUTERS/Brendan McDermid]
Reuters/Brendan McDermid
William Ackman, founder and CEO of hedge fund Pershing Square Capital
Management, speaks during the Sohn Investment Conference in New York May 4,
2015.
Reuters/Brendan McDermid

By Michael Flaherty

NEW YORK (Reuters) - A group of hedge funds have formed a new lobbying arm
to promote the benefits of shareholder activism across the U.S. economy, as
U.S. politicians turn up the heat on activist investors.

The Council for Investor Rights and Corporate Accountability (CIRCA)
announced its formation on Wednesday, saying it is committed to promoting
the actions of shareholder activists, and their positive impact on
corporate governance and business policies at publicly traded companies.

The Washington D.C.-based trade association said it is backed by a
consortium of activist firms, but does not name them in the press release.
According to a person with direct knowledge of the matter, the group's
backers are: William Ackman of Pershing Square, Carl Icahn, Daniel Loeb of
Third Point, Paul Singer of Elliott Associates and Barry Rosenstein of Jana
Partners.

Activist investors buy minority stakes in what they believe are
under-valued and poorly managed companies and then quickly agitate for
changes. Activists often push for overhauls in corporate strategy, cash
management, management team and board composition - sometimes under the
threat of a proxy fight if the company does not meet their demands.

Activist investors launched a record 508 campaigns against U.S. companies
last year, according to Thomson Reuters data, targeting names such as
DuPont (DD.N </finance/stocks/overview?symbol=DD.N>), General Electric (GE.N
</finance/stocks/overview?symbol=GE.N>), and AIG (AIG.N
</finance/stocks/overview?symbol=AIG.N>).

The actions of certain activist hedge funds, however, has also attracted
the attention of politicians, including Democratic presidential candidates
Hilary Clinton and Bernie Sanders.

Ackman was one of the Valeant Pharmaceuticals International Inc (VRX.TO
</finance/stocks/overview?symbol=VRX.TO>) officials who recently appeared
in front of a Congressional committee to address the massive price hikes
Valeant issued on some of its drugs.

Valeant, a drug company whose creation was led by activist hedge fund
ValueAct Partners, is under federal investigation for its use of specialty
pharmacy companies.

Politicians have targeted activists for being short term investors, at the
expense of longer term shareholders.

"CIRCA was founded on the widely accepted idea that a well-functioning
system of checks and balances between boards of directors and shareholders
is fundamental to long term economic

growth and U.S. prosperity," CIRCA Senior Advisor Rob

Collins said in the press release.

The page and a half announcement does not detail specific actions the group
plans to takes, but rather outlines its core principles, which include
effective engagement between boards and investors and ensuring that
regulations to not allow board entrenchment.

(Reporting by Michael Flaherty; Editing by Chris Reese, Bernard Orr)


Eric D. Schwerin
eschwerin@rosemontseneca.com

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