McDonald's, Wendy's, and Hedge Funds: Hamburger Hedging
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?
David Stowell, Tim Moore
Stowell, David, and Tim Moore. McDonald's, Wendy's, and Hedge Funds: Hamburger Hedging. Case 5-106-006 (KEL181).