WEST PALM BEACH, FL (HEDGECO.NET) – A US shareholder activist, Bob Monks has announced his plans to launch a new hedge fund; according to him the new product will be a dedicated corporate governancehedge fund. The new strategy will employ a long/short trading technique-targeting companies classified as �world�s worst governed companies�.
According to the released statements, the new strategy will be managed by John Higgins of the Ram Trust Services, an investment manager with about $200 million of investor assets. Mr. Monks will serve as an investment adviser to the new fund. He said, �We really wanted to put our money where our mouth is, by combining long and short positions, we are hoping to create a win-win situation.�
Monks is attempting to show that investors could still achieve superior returns by investing with poorly managed firms. He graduated from Harvard Law School, was formerly the head of US Labor Department’s pensions division in the Reagan administration, launched his first activist Lens fund in 1992, and had an average return of 26.1% for a period of about 8 years. The Lens fund closed in 2000.
Monks is out to prove his activist philosophy could also work with hedge funds. In his statement, Mr. Higgins said, �Voting with your feet is one of the purest forms of corporate governance. We are trying to prove the point that poorly run companies will perform worse than others.� The strategy will apply shorting techniques by selling short companies with poor corporate governance, hoping to profit from such strategies when the stock prices of such companies decline, by buying such shares back and making profits from such deals.
Monks added, �Our value added comes from a careful analysis of corporate governance standards rather than market timing.� This activist model hopes to raise issues with poor corporate governance as well.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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