"New Front in War Between Companies and Hedge Funds"

Steven Davidoff reports that it'll be too late for Fortune Brands/Acushnet/Titleist, but a war is brewing to prevent activist hedge funds from "surreptitiously building large positions." A prominent law firm is pressuring the SEC to change certain rules to prevent a repeat of the situation that has one of golf's most storied brands in a firesale so that one hedge funder can cash in.

The law firm cites the Porsche-Volkswagen and LVMH-Hermes cases as examples, as well as two examples in the United States, both involving William A. Ackman’s Pershing Square Capital Management.

The first involved a position taken in J.C. Penney last fall by Pershing and Vornado Realty Trust. The two funds acquired roughly 27 percent of the company before filing a Schedule 13D. Around the same time, Pershing also acquired a 10.9 percent stake in Fortune Brands before disclosing the position.

Shortening the time period, hedge funds say, would curb their ability to invest. Hedge funds would have to pay more to acquire positions, as the market would learn of these acquisitions sooner. The consequences would be that hedge funds would invest in fewer companies, and fewer shareholders would receive the premium hedge funds pay.