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Bill Ackman of Pershing Square Capital Management.
Bill Ackman of Pershing Square Capital Management.
(Pawel Dwulit/THE CANADIAN PRESS)

It’s hard to invest profitably with activists

Is the mismanaged company that pays little heed to the concerns of shareholders becoming an endangered species? It’s starting to look that way, given the dismal returns of activist hedge funds in 2013 and signs that companies are pre-empting their strategies.

According to Hedge Fund Research (via The Financial Times), these hedge funds have returned just 14.4 per cent through the end of November, lagging the S&P 500 by more than 10 percentage points. Yet, money is flowing into these strategies at a record pace: They attracted $7.2-billion (U.S.) in the first nine months of the year – a new record high that eclipses the full-year take in 2006 (the previous record).