> What if hedge funds just happen to get larger than anyone else in the spaces they operate in, precisely by executing this technique, such that there's no "someone else" who would offer more money?
Companies buy companies all the time. Hedge funds, in the grand scheme of things, are not that incredibly large compared to other companies. Also, companies making acquisitions have effectively unlimited funds to do so by taking out loans in order to buy companies. They can also buy companies without even exchanging money by converting stock in a larger ratio, effectively inflating the company's value in order to buy it. So what you're saying doesn't make sense.
> An analogy: you're essentially saying that it's "the best thing to do" to date a vampire and let them suck out all your blood, because if there were a better partner for you to date than a vampire, surely such a partner would be more attractive than the vampire is, and would try harder to date you than the vampire is.
Companies aren't people. If the board of investors wants to sell to a vampire it means that they're actually gaining the most value by selling to that vampire themselves. People need to stop looking at companies as monolithic wholes and actually as the sum intentions of the owners of the companies, the investors.
> People need to stop looking at companies as monolithic wholes and actually as the sum intentions of the owners of the companies, the investors.
This was my point. A vampire, mythologically, can compel a human to obey it: despite the human realizing that it'd really be a dumb idea to let something suck out all of your blood, it's still just really hard to resist letting the vampire do that. There is, I suppose, what might in modern language be called a "superstimulus"—something which causes some part of your brain to override the rest, despite the rest of the brain screaming "no."
Likewise, these hedge funds offer the ultimate opportunity to make a change that is good for investors at the expense of employees. The investors are the part of the brain that is compelled; the employees are the rest of the brain, screaming "no."
I've never heard of a co-op agreeing to be acquired by a hedge fund; have you?
It may not involve hedge funds per se, but you made me think of the saga of Diamond Foods. It was founded as a co-op in 1912, became a public company in 2005, and rapidly pursued growth at any cost, until an accounting scandal brought them back to earth in 2012.
It's a depressing story about how doing something well year after year isn't good enough, so someone is found to strap rocket engines on and shoot for the moon, in an effort to please investors, and it turns out to be a fraud (litigation over which is still ongoing). The end result was a merger into Snyders-Lance.
This resonates with me, because Diamond brand shelled walnuts are what I always used for baking, but when they were pursuing growth they were expanding into snacks, and I presume their current owner is primarily concerned with that market.
> This was my point. A vampire, mythologically, can compel a human to obey it: despite the human realizing that it'd really be a dumb idea to let something suck out all of your blood, it's still just really hard to resist letting the vampire do that. There is, I suppose, what might in modern language be called a "superstimulus"—something which causes some part of your brain to override the rest, despite the rest of the brain screaming "no."
You're viewing this as somehow negative. The investors gain by selling, they don't lose. There is no "sucking of blood" that occurs.
> Likewise, these hedge funds offer the ultimate opportunity to make a change that is good for investors at the expense of employees.
Employees are often part shareholders at these companies. They gain as well.
> I've never heard of a co-op agreeing to be acquired by a hedge fund; have you?
Just found out about the co-op group in the UK from reading this article. It seems like they are a member based co-op vs. an employee owned one and it looks like they were shedding their banking division to isolate the loss from the whole financial collapse. It does seem like employee owned companies would do more to preserve their jobs vs. scrap the business for short term profit. So while one could argue that some sort of reform of this would help buffer the pain being inflicted on employees moving towards more egalitarian models of ownership would seem to be a better goal in the long run.
> Likewise, these hedge funds offer the ultimate opportunity to make a change that is good for investors at the expense of employees.
That is true with or without hedge funds. Investors will always take actions that benefit themselves, no matter the cost to employees. Employees will always only benefit when that is a by-product of the investors benefiting.
Protecting employees is something that is important, but preventing hedge funds from buying companies is not how you protect them.
The validity of your last sentence depends on what hedge funds are, I think. My understanding is that these days the defining characteristic of hedge funds, as opposed to mutual funds, is the lack of regulation. In that case, I suggest things could be different without hedge funds, or with a different set of regulations for them.
Companies buy companies all the time. Hedge funds, in the grand scheme of things, are not that incredibly large compared to other companies. Also, companies making acquisitions have effectively unlimited funds to do so by taking out loans in order to buy companies. They can also buy companies without even exchanging money by converting stock in a larger ratio, effectively inflating the company's value in order to buy it. So what you're saying doesn't make sense.
> An analogy: you're essentially saying that it's "the best thing to do" to date a vampire and let them suck out all your blood, because if there were a better partner for you to date than a vampire, surely such a partner would be more attractive than the vampire is, and would try harder to date you than the vampire is.
Companies aren't people. If the board of investors wants to sell to a vampire it means that they're actually gaining the most value by selling to that vampire themselves. People need to stop looking at companies as monolithic wholes and actually as the sum intentions of the owners of the companies, the investors.