Archive for November, 2013

Shareholders finding opportunity in activism!

November 1st, 2013 No comments
What follows is a Facebook post, prompted by this piece at NYT:
Govts everywhere have done a GREAT job of protecting established, crony-capital firms, to the point that job-growth, entrepreneurship, youth and society are being squished, even as elites resort to bread-and-circus welfare/dissent-control policies to keep the situation under wraps.

Yet, where there is opportunity, people will seek to innovate around obstacles–or to leech off of the bloated, Govt-protected parasites (as Japan’s Yakuza gangs do).

There is opportunity in “shareholder activism” because large, publicly-listed firms are wasting assets and performing poorly–ROE and ROA have been steadily falling–even as compensation for the CEOs has been rising. This situation has been set up both by regulations that protect these firms and, ironically, by regulations that “protect” the public/clueless/Joe Schmoe investors.

The answers come both by (1) freeing up competition, as the US has just embarked on via the JOBS Act, which allows small, growing companies to get PRIVATE funding (including crowd-sourced) and to get much larger before they are forced onto the public market, and (2) letting shareholders take their lumps and figure out how to protect themselves — as I have argued to Robert A.G. Monks, a veteran shareholder activist:

Likewise, while we should maintain regulation on existing firms, we can greatly enliven the economy and bring banks under real control by freeing up regulations on NEW
businesses whose owners do not socialize risk via #LimitedLiability, and banks that do not socialize risk via Govt-rune #DepositInsurance.

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