Case Detail

Case Summary

McDonald's, Wendy's, and Hedge Funds: Hamburger Hedging

Case Number: 5-106-006, Year Published: 2007

HBS Number: KEL181

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Authors: David Stowell; Tim Moore

Key Concepts

Valuation, Financial Strategy, Corporate Strategy, Corporate Governance, Real Estate, Business Communication

Abstract

Are hedge funds heroes or villains? Management of Blockbuster, Time Warner, Six Flags, Knight-Ridder, and Bally Total Fitness might prefer the “villain” appellation, but Enron, WorldCom, Tyco, and HealthSouth shareholders might view management as the real villains and hedge funds as vehicles to oust incompetent corporate managers before they run companies into the ground or steal them through fraudulent transactions. Could the pressure exerted by activist hedge funds on targeted companies result in increased share prices, management accountability, and better communication with shareholders? Or does it distract management from its primary goal of enhancing long-term shareholder value?

Number of Pages: 24

Extended Case Information

Teaching Areas: Economics, Finance, Strategy

Teaching Note Available: Yes

Geographic: United States

Industry: Hedge Funds

Organization Name: McDonald's, Wendy's, Pershing Square

Organization Size: Large

Year of Case: 2006