Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

SEC Should Shorten the 13F Reporting Period, Not 13D

Wachtell Lipton Rosen & Katz, a law firm that usually represents companies against hostile takeovers, is circulating a petition to shorten the 13D reporting period to 1 day. Currently activist hedge funds had to disclose their positions and intent on a form called 13D within 10 days of acquiring a 5% position in the target company. Previously we published an article detailing how Pershing Square and Vornado acquired an additional 17% position in JC Penney during the 10 days before they filed the 13D form. Wachtell is trying to prevent these kinds of situations, so that the target firms and their incompetent/entrenched managements can defend themselves better against activist shareholders.


There are inefficiencies in the capital markets and hedge funds spend considerable resources to uncover them. The profit they make motivates them to look for these opportunities. Existing shareholders of these companies benefit from these activities. Among those who do not benefit are, of course, short sellers and incompetent/entrenched managers of the target companies. If the reporting period of the 13D form is shortened then this may encourage hedge funds to share their ideas with fellow hedgies so that each hedge fund separately can build a 5% position without notifying anyone. That’s what Bill Ackman did with JC Penney. Pershing Square and Vornado acted in concert and each built the initial 5% position at the same time. That wasn’t a coincidence.

If a ten day reporting period is enough for hedge funds to acquire significant positions, we believe it’s more appropriate to shorten the reporting period of 13F forms. Currently hedge funds have up to 45 days to report their positions to the SEC. Also, hedge funds don’t have to report their short positions. We believe they should report those positions too.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.