Morrow Sodali Fund Solutions understands how activist hedge funds and institutions take advantage of the structure of closed-end funds to make more money for themselves often at the expense of long term shareholders.
Our team has a long track record of winning proxy battles, and engaging activist holders to preempt those situations before they become battles.
Fund governance advisory including mandated annual meetings
Shareholder constituency research including UITs, institutional investors, retail holders and activist investors
Proactive monitoring of shareholder base and activist positions
Scenario-based projections and analysis of proxy voting incorporating activist holdings
Enhanced retail program to effectively communicate to holders on a regular basis before a proxy fight arises
Proactive daily monitoring of institutional buying/selling with a focus on activists
Outreach and engagement with proxy advisors - Institutional Shareholder Services (ISS) and Glass Lewis
Proprietary “Financial Advisor Program” to engage retail shareholders
Strong relationships with leading law firms
Full-service proxy solicitation
Drafting of “fight” letters and guidance on retail and institutional shareholder messaging
Tabulation of proxy voting and certification of results
Presentation of analytics and results to senior management and fund boards
Closed-end funds must conduct annual shareholder meetings similar to corporations. A key difference for these funds is the activist shareholders who seek to leverage the fund’s governance rules to arbitrage the difference between the NAV (Net Asset Value) of the fund’s assets and the market trading price.
Activist shareholder proposals have increased sharply over the last several years. These hedge funds and institutional activists are not normally acting in the best interest of all shareholders when they seek to receive a rights offering or convert a closed-end fund with a healthy dividend into an open-end mutual fund.
With Morrow Sodali Fund Solutions and Morrow Sodali’s roots in shareholder activist contests, Morrow Sodali Fund Solutions can provide balanced and effective guidance to managers and fund boards that find themselves under attack by an activist. Understanding the composition of the shareholder base informs Morrow Sodali Fund Solutions’ targeted plan for each specific fund. In addition, Morrow Sodali Fund Solutions has developed a monitoring program to proactively track closed-end funds and understand when and why activists may choose a particular fund as the next target.