Shining a Light on Strategically Leaked Plans of Activist Investors

On October 12, 2015, an activist hedge fund we’ll call John Doe Management filed a Form 13D, disclosing 5.5 percent ownership and an intent to pursue an activist campaign in a target firm we’ll call Industrial Corp (IC). The next day, IC’s stock rose 7 percent. John Doe Management’s last purchase of IC prior to filing the 13D occurred on October 3. The following day, an IP address owned by a different hedge fund, referred to here as AAA Group, suddenly became interested in IC, logging onto the Securities and Exchange Commission’s EDGAR database and downloading IC’s financial statements. This … Read more