A panel of activist fund investors assured the breakfast audience at the National Association of Corporate Directors/New England today that all public companies are on their potential radar screen. One panelist stated “the only defense is, don’t be public,” a sardonic remark reminiscent of the conclusion reached by the computer “Whopper” when analyzing global thermonuclear war in the movie War Games: “the only way to win is not to play.”

The panel was, if you will, “stacked” with activist proponents. Although some acknowledgement was given to the view that activist investors may not drive better shareholder returns (disputed), and that certain activists may not have the most productive approaches (not disputed), attending directors were assured that activist funds have huge capital: about 20% of new monies flowing into funds are going to activists.

Unlike just a few years ago, activists now often team up with institutional investors (who in the past were “quiet” money”). The panel outlined activist “best behavior:” talk with management rather than launching an immediate proxy fight, let management take credit for improvements, explain that activist funds now are “long term players” not in it for quick profit.

Panelists included principals of Barington Capital (a fifteen year player in the manufacturing and consumer space with a two to five year hold target), Hedge Fund Solutions (consultant to both investors and boards), Trian (successful in adding activist directors to PepsiCo and Mellon and now involved in a rare proxy fight at DuPont) and Ethos Management (which claims to speak three languages: the languages of management, investors and boards; and traces much tension to “miscommunication”).

The underlying theme: directors should engage activists early,  listen to what they have to say and create a dialogue. Just because a hedge fund approaches a company, it does not mean that agreement cannot be reached on how to maximize shareholder return. As Matt Peltz of Trian (a multibillion dollar player) noted, Trian is always willing to listen and learn: “I’d rather be rich than right.”