Globe and Mail- TransAlta is one of a growing list of Canadian companies that feature activist shareholders that took positions in a different era, and now face a world of pain as they contemplate heading for the exits.
A number of hedge funds, awash in cash, bought into underperforming resource plays last year, on the understandable logic that either the company could be fixed, or it would get snapped up in an M&A market gone mad. Before August, this was a winning strategy.
The ever-deepening credit crunch turns this market dynamic on its head. Takeovers are rare, corporate fixes are tougher to pull off, and many hedge funds need to raise cash as banks cut their leverage. It’s always difficult to sell large positions in relatively illiquid companies, it’s even more costly in a volatile market like this
