Reuters- The world’s largest mutual fund firm is about to take on an unlikely title: activist shareholder.
Fidelity Investments is expected next week to vote against a buyout offer for U.S. broadcaster Clear Channel Communications Inc., highlighting the increasingly active approach mutual funds are taking to boost investment returns.
Competition from hedge funds that routinely take activist positions, as well as regulations that have made funds more accountable to their shareholders, are driving the $10.6 trillion mutual fund industry to become vocal on their investments.
Fidelity, Clear Channel’s biggest institutional shareholder with a 9.7 percent stake, will on May 8 thumb its nose at a nearly $20 billion sweetened takeover offer for the broadcaster by bidders Thomas H. Lee and Bain Capital, a source close to Fidelity said.
Charles Mangum, a Fidelity portfolio manager, has said on Fidelity’s Web site that an earlier offer of $37.60 per share for Clear Channel “significantly undervalues the company’s assets.”
That offer and another one made at $39 a share had the management’s backing.
Boston-based Fidelity’s vote is being watched closely, not only because of its substantial holdings in hundreds of companies, but also because it and other mainstream funds have rarely opposed management.
