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Banking

Hedge Funds: Icahn strikes again

The latest target of the hedge fund activist is Time Warner

Veteran activist investor Carl Icahn, who has been lobbying various corporate executives to undertake radical reform of their companies and boost their stock prices for the past 20 years, has turned his attention to US company Time Warner.

Icahn, who runs his own $2 billion hedge fund, met Time Warner's chief executive in August to put pressure on him to spin off the company's cable unit and buy back $20 billion of the company's stock after disclosing that he and three other investors that share his views own more than $2.2 billion of Time Warner stock. Time Warner is already planning a partial spin-off of the cable unit and a $5 billion share buyback.

However, when Time Warner's market cap is $87 billion, it's debatable what Icahn and the other investors can achieve if the company ignores his demands.

Corporatism

It's the latest example of increasing corporate activism by hedge funds, which seek to influence the boards of public companies in which they have a stake directly or to attract the attention of private-equity funds, which might be enticed to launch a public-to-private takeover of the company in question.

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