Hedge Funds: M&A Target?

Hedge Funds: The New World Tag-Team Champions

Here is a tip: When hedge funds want to shake up a company, two agitating funds are better than one. Activist hedge funds never admit that they act in concert, but when they agitate at the same time, one can be sure that a company felt the heat and gave in. This is seldom bad for investors. Take PW Eagle(PWEI). Caxton Associates, one of the largest hedge funds in the world and not a traditional activist, owns 6% of the company and asked for board changes. Pirate Capital, owner of 17% of PW Eagle's shares, made similar demands.

Last week, PW Eagle agreed to nominate seven new board members and granted the elimination of the staggered board elections. Under the activist pressure, it is likely that the new board will put the company up for sale, says Robert Brown, analyst at Craig-Hallum, a boutique investment bank. Year to date, the stock is up 40%. Meanwhile, profits soared after last year's expensive and deadly hurricane season boosted demand for pipe products, the company's main business.

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