Sure looks like a hostile take-over to me. I am referring to all the shenanigans at Yahoo. Fred Amoroso, Yahoo’s new board chairman released a statement saying they are confident that these changes will server the best interest of their shareholders.
With Scott Thompson’s resignation and that of Patti Hart, who lead the hunt for Thompson, the door is now wide open to bring in new minions for some behind the scenes wheeling and dealing. Thompson was only four months in the role since Carol Bartz’s infamous firing by email. Thompson was replaced by interim chief Ross Levinsohn.
From the outside looking in, the master puppeteer looks to be Dan Loeb. Allegations were made by activist investor Dan Loeb claiming the chief executive did not attain the college qualifications he claimed. Loeb has secured seats on Yahoo’s board for himself and two other members of Third Point, a hedge fund he founded. Now he has two more seats he is trying to fill with his yes-men. If he succeeds – then there were five.
I have to question if having a hedge fund run Yahoo is in the best interest of the shareholders, or Dan Loeb.
I am not saying that Scott Thompson was right, wrong or actually made a mistake. It is never a good idea to put misleading information on your resume, and things get real blurry from his previous employment at eBay and PayPal. But before you put all the blame on Thompson, you also have to look at Yahoo’s board of directors. It speaks volumes that the board was insubordinate in conducting a proper analysis of Thompson’s work history and education. Each and every board member had to vote for Thompson to become Yahoo’s CEO. As a side note – Yahoo has had five CEO’s in six years. I have to say with this record, I have to blame the board of directors.
It should be no surprise to Yahoo or its shareholders about Dan Loeb. He has a long history of launching proxy fights – and Yahoo is the latest company in his crosshairs. Third Point owns about 5.8% of Yahoo, and is the largest outside shareholder. In February, Third Point filed paperwork proposing four new Yahoo board members. There is a lot more detail on this subject, which I will not cover here. I will say this – At first, Yahoo didn’t want to play ball. But Third Point scored a coup by finding and exposing Thompson’s padded resume. Now, Yahoo has settled with Loeb to end the proxy fight. On Sunday, Yahoo and Third Point released a joint statement explaining the terms.
In addition, Yahoo said Sunday that it named Fred Amoroso, an existing board member, as chairman. The chairman position had been in play since a February board shakeup that wiped out most of Yahoo’s previous directors.
Perhaps you may remember “Jerry and David’s Guide to the World Wide Web”. This was the brain child of Jerry Yang and David Filo, two college students at Stanford University in 1994. This guide was basically their way of keeping track of their online information. It grew into Yahoo.
Since those days, Yahoo has come a long way, up and down. But is now is the slide back down.
So back to my question above. Should a hedge fund be allowed to run another company?
By definition – a hedge fund is an investment fund that can undertake a wider range of investment and trading activities than other funds, but which is only open for investment from particular types of investors specified by regulators. These investors are typically institutions, such as pension funds, university endowments and foundations, or high net worth individuals. As a class, hedge funds invest in a diverse range of assets, but they most commonly trade liquid securities on public markets. They also employ a wide variety of investment strategies, and make use of techniques such as short selling and leverage. This definition is explained Wikipedia.
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