Continue reading Goldman Sachs Looks to Block Proxy Access for Dissident Shareholder

Goldman Sachs Looks to Block Proxy Access for Dissident Shareholder originally appeared on BloggingStocks on Wed, 13 Jan 2010 17:20:00 EST. Please see our terms for use of feeds.

Continue reading Goldman Sachs sued over expected bonuses

Goldman Sachs sued over expected bonuses originally appeared on BloggingStocks on Tue, 15 Dec 2009 17:40:00 EST. Please see our terms for use of feeds.

Continue reading Goldman Sachs shareholders want less bonuses, more of the profit

Goldman Sachs shareholders want less bonuses, more of the profit originally appeared on BloggingStocks on Fri, 20 Nov 2009 10:00:00 EST. Please see our terms for use of feeds.

American International Group (NYSE: AIG) has pulled itself out of penny-stock territory after its shareholders approved a 1-for-20 reverse stock split on Tuesday. However, the shares are swallowing some losses today nonetheless, as investors reshuffle their portfolios following the adjustment. AIG opened today at $19.65 after falling as low as $13 in premarket action.

CEO Edward Liddy reassured shareholders at the company's annual meeting that he's confident a new CEO and chairman will be named shortly. The bailed-out insurance issue also named some new directors to its board, at least seven of whom were recommended and approved by the U.S. Treasury Department or its trustees.

Continue reading AIG sinks on 1-for-20 reverse split; what about the options?

AIG sinks on 1-for-20 reverse split; what about the options? originally appeared on BloggingStocks on Wed, 01 Jul 2009 11:40:00 EST. Please see our terms for use of feeds.

A report today in the New York Post suggests that shareholders are anxious to oust Kenneth Lewis, CEO of Bank of America Corporation (NYSE: BAC). The paper says that a group of angry investors, spearheaded by Jerry Finger, has compiled a list of demands to present at the bank's next annual meeting. Finger and his irate mob will request that the roles of CEO and chairman be split, and the outspoken investor said it's safe to assume that a brand-new chief executive is also high on his wish list.

Finger made headlines last month by filing a class-action lawsuit against B of A, alleging that its merger with Merrill Lynch failed to protect shareholders' interests. New York Attorney General Andrew Cuomo is now investigating that very same matter, and reports say that the AG may demand the return of $4 billion in bonuses to Merrill employees that were rushed through prior to the merger's completion.

Continue reading Will Bank of America shareholders show CEO Kenneth Lewis the door?

Will Bank of America shareholders show CEO Kenneth Lewis the door? originally appeared on BloggingStocks on Mon, 02 Feb 2009 12:30:00 EST. Please see our terms for use of feeds.

Fortis shareholders give board of directors an earful originally appeared on BloggingStocks on Mon, 01 Dec 2008 12:02:00 EST. Please see our terms for use of feeds.

Once again investors get left holding the bag.

Microsoft (NASDAQ: MSFT) shareholders should breathe a sigh of relief for not overpaying for an internet search company, Yahoo (NASDAQ: YHOO) where CEO Jerry Yang let his ego get in the way of handsome profits. Yang rejected the $47.5 billion offer that Microsoft put on the table. Why? Because he thought the company is worth more than $50 billion. As reported by the AP: "Clearly there's frustration," said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. "I am not even sure if Yahoo cares about its shareholders because they didn't show much regard for shareholders' best interests in this process."

Yang actually thinks that a more sophisticated advertising platform is the secret sauce needed to produce a spike in revenue growth. Keep in mind that revenue grew by only 12% last year, and there is no indication that that number is going to be much higher in '08. Yang thinks that he will be able to grow revenue's by 25 percent in 2009 and 2010. Uh Huh!

I think that today's selloff in Yahoo stock will be an indication of what the public thinks of Yang's plan.

Could it be that in the long run he will be proved correct? I doubt it but only time will tell.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/5/08.

Yahoo CEO Yang sells out -- shareholders that is originally appeared on BloggingStocks on Mon, 05 May 2008 08:32:00 EST. Please see our terms for use of feeds.

Continue reading Martin Wolf: 'Heads I win, tails you lose' financial incentives must stop

Martin Wolf: 'Heads I win, tails you lose' financial incentives must stop originally appeared on BloggingStocks on Thu, 27 Mar 2008 15:59:00 EST. Please see our terms for use of feeds.

In an editorial titled Union Proxies (subscription required), the Wall Street Journal argues that the SEC's decision to allow companies to bar third-party candidates for the board of directors from the ballot was actually the right move.

I argued just the opposite here and here, but the Journal does bring up a point that's worth responding to:

"Access" sounds good in theory. But in practice, what really matters is whether such proxy slates serve the interests of all shareholders, or merely a few. In the case of proxy challenges, the main agitators are unions and their political allies who run public pension funds. These groups have their own political agendas that they want companies to pursue, and those agendas may or may not serve the larger interest of increasing shareholder value. In the worst case, such agitation could empower special-interests on boards that reduce a company's value.

Here's the flaw in the Journal's reasoning: If the union-backed pension funds are supporting ideas that are wildly out of touch with the interests of other shareholders, then those shareholders have a right to vote against them, and presumably they would.

And if the majority of a company's shareholders vote for the candidate, then they should gain a seat on the board. This is basically about voting rights: shareholders in public companies should have a right to put the people they want on the board of directors. Denying proxy access because many candidates would have special interests is like arguing that union members shouldn't be allowed to vote or run in political elections because they have ulterior motives. Maybe they do, but that's up to the voters to decide!

We've seen enough examples of supine boards of directors and managers who stayed in their roles as Chief Value Destroyer for far too long because of these boards. Proxy access would have been a great way to make directors more accountable to shareholders, and it's a really sad day for corporate governance when the SEC gets in the way of that.

Why the Wall Street Journal is wrong about proxy access originally appeared on BloggingStocks on Sun, 09 Dec 2007 11:40:00 EST. Please see our terms for use of feeds.

Continue reading Why should investors lose a voice in who runs their companies?

Why should investors lose a voice in who runs their companies? originally appeared on BloggingStocks on Tue, 04 Dec 2007 18:01:00 EST. Please see our terms for use of feeds.

Continue reading Liveblogging Cisco Systems fourth quarter conference call

Liveblogging Cisco Systems fourth quarter conference call originally appeared on BloggingStocks on Tue, 07 Aug 2007 16:27:00 EST. Please see our terms for use of feeds.

Yahoo! shareholders send a message originally appeared on BloggingStocks on Wed, 13 Jun 2007 12:00:00 EST. Please see our terms for use of feeds.

Anyone who was following the market a year ago remembers Home Depot Inc. (NYSE: HD)'s 2006 annual meeting, which was botched about as badly as anyone has ever botched anything. It was described as appalling, arrogant, and a bunch of other words that we can't type on a family site like BloggingStocks.

Now that former CEO Robert Nardelli has gone (with his $210 million severance package), new CEO Frank Blake is hoping to do better on the investor relations front. He will personally take questions from investors at the meeting, and won't even use a timer to keep people from rambling!

So far, Blake has come across as the anti-Nardelli: Humble, ready to admit mistakes, and even a bit Buffett-like with his folksy analysis of operations.

While it's all well and good that the company's management has a nicer public image, there is still a lot of work to be done on the operations front. The most recent quarter was a disappointment (as Blake put it, "While we expected a tough quarter, this was worse than we anticipated"), and the company will need to execute a turnaround.

But the nicer public relations campaign should buy Home Depot time with investors. It wasn't so long ago that Jim Cramer was jokingly referring to Home Depot as "Home Despot" -- those days are now behind it. But can the company deliver results?

Home Depot aims for a kinder, gentler annual meeting originally appeared on BloggingStocks on Wed, 23 May 2007 15:08:00 EST. Please see our terms for use of feeds.

In an interesting case of what could be a conflict of interest, the New York Times reported on Friday that Institutional Shareholder Services was recommending that New York Times Co. (NYSE: NYT) shareholders "withhold their support for board members to pressure the company over dissatisfaction with its performance and ownership structure." At last year's meetings, an investor group that included Morgan Stanley withheld 30% of the company's shares from support of the directors.

However, the company is controlled by the Ochs-Sulzberger family, which holds 89% of the Class-B shares, enough to give them complete control over 9 of the 13 board members. So voting against the company's board is a symbolic gesture rather than a practical example of activist investing likely to cause changes.

While the company's shares have performed poorly for a long time, this may be more a reflection of the changing face of the news industry, rather than the competence of management.

For more information about corporate governance and using Institutional Shareholder Services' information to make informed decisions during proxy season, read my piece How to make the most of proxy season.

New York Times reports: Vote against our board members! originally appeared on BloggingStocks on Fri, 06 Apr 2007 16:26:00 EST. Please see our terms for use of feeds.

According to a study written up in the New York Times (subscription required) this week, it isn't lousy management's frequent trading that's responsible for the poor performance of mutual funds. Nope, it's the investors who redeem their shares and force the funds to sell even if they don't want to. The study found that "liquidity-motivated" trades perform poorly compared to trades based on fundamentals.

Mark Hulbert, the author of the piece, suggests that investing in closed-end funds may be a way to avoid this problem, because they generally don't face redemption. In an exchange-traded fund, an investor who wants to sell shares just sells them to another investor. It's just like how selling shares of McDonald's Corp. (NYSE:MCD) would have no impact on the operations of the company.

And yet there's still a problem: Regardless of what any study says, mutual funds simply cannot, on average, outperform passively managed indexes. It's a zero-sum game. Before expenses, the average fund's performance can only be average. After expenses, the average fund is considerably below average. The fact that ETFs are almost always passively managed (rebalanced/adjusted once a year generally) is a large contributor to their outperformance. The fact that they are immune to redemptions by panic-stricken shareholders at precisely the wrong time adds to their value.

The more I study it, the more obvious I think it becomes: ETFs are probably better than traditional mutual funds for most investors.

Mutual fund underperforming? Blame the shareholders! originally appeared on BloggingStocks on Mon, 15 Jan 2007 18:10:00 EST. Please see our terms for use of feeds.