Cedar Fair, one of America’s leading entertainment companies, is at the center of a fight for control between a hedge fund and some entrenched managers.

The billion-dollar company operates amusement parks from King’s Dominion on the East Coast to Knott’s Berry Farm in Califorinia. But it began with a park in Sandusky, Ohio.

Cedar Point sits on a tiny spit of land in Lake Erie and is home to the most roller coasters in the world. It’s the second-oldest amusement park in the country, and the headquarters of Cedar Fair, which is second to Disney in the domestic amusement park business.

And locals are the key to the company’s future. That’s because the majority of shares in Cedar Fair are still held by independent investors — a situation that George Dent of Case Western Reserve University says is increasingly rare in corporate America.

“It’s very unusual these days,” Dent says. “Well over half of the equity of most publicly traded companies is now held by institutional investors.”

Even so, the Texas hedge fund the Q Group and current company leaders are waged in a desperate struggle for control of the company.

Dent says it’s a common struggle, one playing out daily in corporations.

“Usually, disputes are between managers who want to hang on to the profits and re-invest them, versus the investors who want to have those profits paid out by dividends or repurchases of the company’s stock,” he says.

But since neither Q Group nor the board controls enough Cedar Fair stock, each needs to win the hearts — actually, the proxies — of small investors. Current managers had built the company into a profit leader, but in expanding, it took on more than $1.5 billion in debt. Then came the recession.

CEO Dick Kinzell, who recently had to give up his board chairmanship and confirmed his retirement at year’s end, proposed selling to Apollo Entertainment — a holding company that would absorb the debt, take Cedar Fair private and keep management intact.

But the price offered was half the stock’s pre-recession level. Q Group then bought enough shares to block the deal and began appealing to thousands of small shareholders for control.

“I thought that share price they quoted was extremely cheap, and I wouldn’t have voted my own family shares for it,” says Randy Hunt, a Sandusky investment broker who owns shares in Cedar Fair. “And I think the Q Group saw what Cedar Fair had built, and they saw it as a value.”

Many other investors saw the value, too, but not just in the stock price. Sue Sheid is a happy Cedar Fair investor.

“It’s paid dividends I have used since 1992, and it’s been wonderful,” she says. “And of course, especially for the community, its always been a good thing.”

Hunt agrees. He says Q Group wants to maximize the value of the shares, but when a company has a local footprint like Cedar Fair’s there are other considerations.

“I think there’s a strong feeling here,” Hunt says. “We want to see it kind of stay the same way it is, and, I mean, if they moved the headquarters out of here, psychologically and financially it would be devastating.”

Two big players in the struggle for Cedar Fair will square off at the next annual meeting on Thursday. But since neither has power without investor proxies, it’s Cedar Fair’s small investors who may prove to be the deciding factor in the fate of the amusement company.

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