MicroCap Activist Funds
A recent article in the Financial Times titled “Activist funds set their sights on microcaps” discuses a surge of microcap activist funds. While large cap activist have been a source of controversy for years, microcap activist funds are just starting to emerge and may be less controversial than their larger counterparts.
In the first 9 months of 2016, 61 micro-cap public companies have “found themselves on the receiving end of attention from activist funds”.
Many, including microcap activist fund managers, believe there is opportunity in microcap activism because of inefficiencies in the microcap space. Because microcap issuers usually are less well researched by analysts, have access to fewer corporate advisers/expertise, and are less likely to follow corporate governance best practices, many activist funds see a clear path to significant value add.
Not only do microcap activist funds see an opportunity but, many microcap management teams also realize the value a well capitalized fund can add in terms of business growth and presence in the trading markets. This is a strong contrast to larger activists funds who tend to publicly clash with the management teams of blue chips the seek to influence.
You can read the full article in the Financial Times HERE.