Born from our belief that corporate governance is a crucial yet underpriced predictor of returns and corporate outcomes, we launched The Management Fund I, L.P. in October of 2012. By allocating capital away from the worst corporate actors and towards the best, we aim to reward the most exceptionally governed companies while punishing those who would use shareholder capital for selfish or unsustainable means.
While attending the Intentionally Designed Endowment Conference in Cambridge, MA earlier this quarter, our team was struck by the interest shown amongst endowment managers for ‘ESG’ or ‘SRI’ investing. However, we were also struck with the revelation that these endowment managers often find it difficult to articulate the effectiveness of ESG strategies to their board, investment committees and consultants.
Recent articles in the Wall Street Journal and New York Times have highlighted the increased use of appraisal pricing to combat cash offers of management buyouts at depressed valuations. The New York Times called the technique ‘A New Form of Shareholder Activism’ while the Wall Street Journal penned an article titled ‘Hedge Funds Wield Risky Legal Ploy to Milk Buyouts’. Although it is humorous for us to see such divergent descriptions of the same subject, not surprisingly, both venerable institutions got it wrong.