Bulldog Investors, managed by Phillip Goldstein, Andrew Dakos and Steven Samuels, has won important backing from proxy advisory firm International Shareholder Services (ISS) as it attempts to have Goldstein (pictured) and Dakos elected to Hill International Inc (NYSE:HIL)’s board of directors through a proxy vote. Bulldog Investors, voted as one of the top ten activist hedge funds by Activist Insight in early 2014, has beneficial ownership of 2.79 million shares of Hill International according to a 13D filing on May 5, a 5.53% stake in the company. It reported no ownership in the company as of March 31.
Following activist funds like Bulldog Investors is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Bulldog can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay around 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 33 months since our small-cap strategy was launched it has returned 144% and beaten the S&P 500 ETF (SPY) by over 84 percentage points (read more details). Soon, we’ll be releasing a new quarterly newsletter written by former activist hedge fund analyst Michael Bland that tracks ten or so activist campaigns at any given time.
The May 5 filing by Bulldog Investors followed a flurry of activity on May 4, as private equity firm DC Capital Partners LLC (not to be confused with Douglas Dethy’s DC Capital Partners LP) sent a letter to Hill International Inc (NYSE:HIL) President and CEO David Richter, in which it proposed to buy the company for $5.50 per share and take it private. Also a shareholder of Hill International’s, DC Capital Partners LLC expressed satisfaction with how the construction management firm rebounded from the liquidity crisis it suffered in Libya, but also cautioned against the company’s overall exposure to the Middle East. The proposed purchase set a premium of 40.7% on Hill International’s shares at the time, though they shot up by 24% on May 4 on the news.