This website uses cookies to ensure you have the best experience. Learn more

Hermitage Capital Essay

1250 words - 5 pages

HERMITAGE CAPITAL MANAGEMENT CASE

1. Give definition of activist investor and discuss pros and cons

Shareholder activism, also known as shareholder engagement or share ownership, occurs when shareholders use their ownership rights to monitor and influence how their portfolio companies manage ESG issues.

Sullivan and Mackenzie (2006) categorize the activism strategies as (i) dialogue or engagement, in which companies meet with investor to discuss the firm’s strategy, how the firm plans to meet its objectives, issues related to CSR and corporate governance, and so on; (ii) the use of voting and other formal rights, including attending annual general meetings to ask questions, ...view middle of the document...

However, those that do establish a large position over time often have ideas about how management should use the company's assets, improve operations or enhance shareholder value.

* Demand For the Shares Could Perk Up Activists may snap up a large percentage of a company's outstanding stock in a relatively short period of time. In response, other firms and/or individuals might attempt to copy these activists by buying the stock as well in the hope of turning a tidy profit. This could push the stock price up and, by extension, benefit common shareholders.


The Potential Downsides to Activist Involvement

* Selling Could Be an Issue In some cases, activists may purchase large blocks of stock. When that happens, the share price may increase. However, when the activist decides it is time to unload the shares, it may logically place a significant amount of downward pressure on the share price. 


* Activists Look Out for Themselves Activist firms often try to convince existing shareholders and the media to understand and buy into their agenda, but at the end of the day, they may be looking out primarily for themselves and doing what is in their best interests.

* Activists Aren't Always Right Right or wrong, many individuals perceive activists as being smarter than the average investor because they have extensive experience on the buy and/or sell-side. There is a belief that activists may have important industry contacts and access to solid research. However, activists aren't always right. Their timing can be off and they can (and do) lose money or become involved in situations that take an extraordinarily long time to pan out.

Executive Summary
Having an activist engaged in a stock you own may be a good thing or a bad thing depending upon the situation. Perhaps the most important things to understand is that sometimes activists have influence over companies that the average common shareholder would generally not have. In addition, they sometimes bring new ideas to the table that could potentially lift value and/or open doors. On the downside, they can be extremely fickle, and sometimes when it comes down to it, they may keep their financial interests.

2. Describe in details investment strategy of Hermitage Capital

Hermitage’s unique research enables the firm to identify companies that have solid fundamentals, unjustifiably cheap valuations and "hidden assets" overlooked by the market.

Hermitage Capital takes large long-term positions in companies, which are highly undervalued on a fundamental basis, but often have corporate governance problems. Instead of waiting for the world to change, they launch their own corporate governance initiatives to unlock company’s intrinsic value.

Firstly, Bill Browder puts together a list of the most important companies as a percent of GDP and a list of the most important companies on the stock market. When a company is on the GDP list but not on the...

Other Papers Like Hermitage Capital

Mystic Monk Essay

5258 words - 22 pages transform the small brotherhood of 13 monks living in a small home used as makeshift rectory into a 500-acre monastery that would include accommodations for 30 monks, a Gothic church, a convent for Carmelite nuns, a retreat center for lay visitors, and a hermitage. Father Daniel Mary had identified a nearby ranch for sale that met the requirements of his vision perfectly, but its listing price of $8.9 million presented a financial obstacle

Freedom And Responsibility Essay

2141 words - 9 pages Built within the Constitution of the United States are specifically defined freedoms that are guaranteed to all citizens. Conversely, with every constitutional freedom there comes a corresponding responsibility. On September 25, 1789, the state legislature’s twelve proposed amendments were transmitted by congress, the first two dealing with congressional representation and congressional pay. The following numbers three through twelve were

Hate Crime Laws

2348 words - 10 pages On June 7, 1998, 49-year-old James Byrd Jr. of Texas accepted a ride from three white men, who then beat him severely, urinated on him, chained him by his ankles to the back of their pick-up truck, dragged him for three miles into the countryside, and dumped his corpse in front of an African-American cemetery (Graczyk). A little over a year later, a jury sentenced ring leader John King to death by lethal injection (“Man Executed for Dragging

Rational Emotional Behavior Therapy Case Study Conceptualization And Treatment Plan

2140 words - 9 pages Rational Emotional Behavior Therapy Case Study of Sarah: A Conceptualization and Treatment Plan Rational emotive behavior therapy, REBT, was developed by Albert Ellis and holds the central belief that the events in our lives do not cause our disturbances but that they are instead caused by our view of the events (Murdock, 2009). Murdock (2009) states that “people are seen as responsible for their behavior” (p. 279) but, because they are

Holidays In Albania

1636 words - 7 pages (“Pogradec City Guide - Drilon & Tushemisht’). You might want to learn more about the culture of Albania, which is well-known for its ancient traditions, as one of the earliest places in Europe. The advantage of spending cultural holidays in Albania is that there are old castles, churches, and houses to visit in almost every city. You should definitely start your cultural vacations by viewing Tirana, the Albanian capital city since 1920. It is

A Heart Of Darkness

1748 words - 7 pages In this short story, there are frequent significant subject and ideas that make the story, "A Heart of Darkness," by Joseph Conrad, and haunting novel. The main theme is absolute white power over the natives. The theme validates the corruption, and the dependence caused by the white people as they took over the Congo. White men were giving all the power; they had no self-control, and in the end they did not use wisely. The white men became

The Aspects Of Vulnerability Among The Exploited In Medical Research

2287 words - 10 pages Essentially, everyone is in some state of vulnerability. However, some of us are more susceptible to harm due to our vulnerabilities. The susceptible are the individuals with the greatest risk. These individuals risk the loss of their autonomy, and maybe even their lives. Vulnerable populations can be found in every subset of society. However, as previously mentioned, there are some vulnerable populations that are at an even greater risk than

The Hitchhiker’S Guide To The Galaxy

1171 words - 5 pages The Hitchhiker’s Guide to the Galaxy As the human race makes life-changing discoveries, it is made apparent that there is always more to learn as the universe, instead of becoming familiar, is becoming absurd. The Hitchhiker’s Guide to the Galaxy, written by Douglas Adams, as well as the 2005 film adaption, portrays absurdity to be an all-encompassing system in the universe. Through the introduction and attempt to understand lack of reason, the

The Ford Motor Company Wage Increase Of 1914 And The Theory Of Incentives And Efficiency Wages

1252 words - 6 pages ‘It’s not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages’ (Henry Ford, cited in Johnson and Weinstein 2004, p. 2). When the Ford Motor Company announced that it would more than double the wages of its workers in January 1914 to a ‘five-dollar day’ minimum, was this a contradiction to Henry Ford’s statement? If customers are actually the ultimate payers of wages, then more than

Historical Analysis Of The Economical Breakthroughs Of The Industrial Revolution

1396 words - 6 pages A Historical Analysis of the Economical Breakthroughs of the Industrial Revolution During the Industrial Revolution, many elements of society experienced huge breakthroughs that would change the way they functioned forever. Economics were definitely one of them. With many new inventions and many factories appearing, many, many, more resources were being created than ever before. Also, all of the revenue from these resources was being given to

Leadership Portrayed in Monologue from Shakespeare’s Henry V

1214 words - 5 pages Leadership is defined as a socially constructed process and which also affect organizational future outcomes. Leader is someone at high position who have overall duty for an organization, she or he decide what to do and the way how to achieve it. (Carter and Greer, 2013)The role of leader is extremely important for an organization, leader use their own power to influence the followers though many different ways such as motivation in order to

Related Essays

Analysis On Of A Development Company

863 words - 4 pages constructions facilities. Mission: without concentrate and elegant shelter life is truly worthless with Innovation Unlimited and to reduce the environmental impact of construction. History: They started their journey in 2004 in Bangladesh. Starting Capital: 5 Crore tk/- Present Capital: 8.6 Crore tk/-(Approximately) Management (Key Members): They have a board of 5 directors and a chairman. The names are given below: 1. Mr. Nasimul islam

Empress Elizabth Petrovna Of Russia Daughter Of Catherine The Great

1212 words - 5 pages between 1820 to 1850, the richest country in the world for it's resources of precious stones, and the world's leading producer of fine porcelain. For twenty years, from her coronation until her death, she made Francesco Bartolomeo Rastrelli her court architect, who not only designed every major building inside and outside the capital, but in honor of Elizabeth, designed the Catherine Palace at Tsarskoe Selo and the Winter Palace in St

Superstar Museums Essay

1967 words - 8 pages serota at tate). Today, according to the website of Richmond Associates, the Tate Development Office has more than thirty employees who are especially hired for fundraising tasks, divided in six teams: Individual Giving, Major Gifts, Corporate Fundraising, Public Sector, Events and Operations. The Tate Development Office “is currently delivering a comprehensive revenue and capital campaign to raise £350m over a multi-year period, at the heart of

Coffee Hause Essay

1881 words - 8 pages Daniel has a total of 13 monks who reside in a rectory alongside 42 acres of land which has been donated to the monastery. His vision is to acquire Irma Lake Ranch, which will provide all of the necessary requirements to expand the monastery. In addition to accommodations for 30 monks, the monastery will have a retreat center for visitors, a Gothic church, a hermitage, and provide a convent for Carmelite nuns (Thompson, Peteraf, Gamble