CWA and the Strategic Organizing Center’s Investment Group (SOC Investment Group) published a new first-of-its-kind report that exposes the long-term harm of Elliott Management, one of the world’s largest activist hedge funds, to companies it targets with its predatory tactics, like AT&T and Frontier Communications. The report also shows that Elliott harms the pension funds that invest with the hedge fund, underperforming less risky public market investments and creating a risk of over-diversification.
The report, “Activist Hedge Fund Risks to Pension Funds: The Case of Elliott Management,” shows the various ways Elliott Management’s activist interventions negatively impact the long-term health of the companies it has targeted, including reduced employment and investment.
“For years we’ve been watching as activist hedge funds extract cash from their target companies, resulting in job cuts and a failure to invest to support long-term company growth,” said CWA President Chris Shelton. “Elliott Management, one of the world’s largest activist hedge funds, has been at the forefront of this in critical sectors like telecom and energy, using bankruptcies and proxy contests to achieve its own short-term gain before exiting. Our report clearly outlines the lasting financial consequences this has for target companies and the negative knock-on effects for pension funds and other investors.”
The report comes months after U.S. Treasury Secretary Janet Yellen, a Biden appointee, reignited the Financial Stability Oversight Council’s Hedge Fund Working Group, an indication that regulators, elected officials, investors, and interested parties are taking a deeper look into the problematic practices of hedge funds like Elliott.