Activist hedge funds use buybacks and undisclosed timing to extract cash

Evidence

Similar to the financial engineering strategies of private equity, hedge funds pressure their targets to utilize mass layoffs, corporate tax evasion, price gouging, corporate asset sales, and acquisitions of cash-rich companies. Extracting the cash is then accomplished through dividends and stock buybacks. Because the SEC does not require detailed disclosures about buybacks and because hedge funds have close relationships to senior executives, it is fair to assume that the selling of shares by hedge funds is timed for maximum profit extraction. — Andrew deWaard, Derivative Media, 145

Categorization

• QUESTION: The buyback-disclosure gap is traceable: which media company saw activist pressure followed by dividend-buyback extraction rather than reinvestment in product?