This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Hedge Fund Report: Fighting for Korea Fund

Hedge fund activists are becoming more involved in the life of companies where they own a stake. When the company is a closed-end fund, some go as far as recommending changes in the investment strategy. The latest example is David Nierenberg, who runs Nierenberg Investment Management and who owns 7.8% of the Korea Equity Fund (KEF).

In a recent 13D filing with the Securities and Exchange Commission, Nierenberg urged Korea Equity to focus on micro- and small-cap growth companies in Korea or merge with the Korea Fund (KF). In a letter to William Barker, the lead director, Nierenberg says he wants those changes to take place before a shareholder meeting in the spring.

Nierenberg earlier this year opposed another activist, Harvard University, in its fight to push fund manager Nomura (NMR) to liquidate the fund. Nierenberg's position prevailed, and the fund continued to trade. But in his letter, Nierenberg complains about the Korea Equity's return to double-digit discounts from net asset value and offers drastic measures to improve the fund's valuation.

"If this $70 million fund wants to stay in business, it needs to pick a differential strategy," Nierenberg said. Small stocks in Korea offer an attractive opportunity, he notes, as the country is the "most wired nation in the world." Currently, KEF is more focused on large-cap stocks.

If Nierenberg doesn't get his way, he will contact the 10 largest shareholders to take "the appropriate course of action," he told Nierenberg says that in this scenario, he hopes to win the backing of City of London Asset Management, the largest shareholder, which has about 25% of the shares.

Seat at the Table

Activist hedge fund Appaloosa Management, which owns 9.3% of Delphi's (DPHIQ) stock, is not happy about shareholder representation in the aftermath of the auto-part maker's bankruptcy. David Tepper, the fund's manager, said he has petitioned the bankruptcy court for the establishment of an equity committee. That won't change the fact that bondholders have priority on claims and assets over shareholders, but to Tepper, the fight is worth it because it is a matter of fairness. " Kmart, Mirant, Adelphia and Texaco, all those bankruptcies had equity committees," he argues.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs