Natural tendency for corporate bloating, page-16

Great discussion on the important feature of a founder/manager remaining at the helm of listed company.

While I too have many holdings in fine companies with this feature, such as MNF HSN OCL ARB etc, I've also been spurned by the founders/managers of other companies (local and abroad) and have learnt worthwhile lessons!

One aspect to be aware of is who the other minority shareholders are. Don't count on their interests being aligned to yours, and be wary particularly if they are institutions with reasonable size holdings. You may find your shares being compulsorily acquired by the founder during a temporary setback. Or, you may find the founder wants out and hands control over to a new shareholder at a superior price to the market price and that which minority shareholders can receive (eg AGI).

It also pays IMO to be familiar with who the independent directors of founder/manager companies are, how much experience they have, and their track record. Will they act for all shareholders?

I guess the point is that our best defence as small shareholders is to know as much as possible about the companies we own, and it is critical that this knowledge includes who the other owners and directors are.


PS. Only last week, well regarded fund manager and company founder Peter Hall decided he'd had enough of being at the helm of Hunter Hall International (HHL). On the Friday before New Year it was abruptly announced that he had agreed to sell 20% of HHL (and much more to follow) to Washington Soul H. Pattinson (WSHP) for $1.00 per share (current market price over $3.00) stunning other shareholders. In the blink of an eye, minority shareholders are now riding shotgun with a new controlling shareholder.
(Disclosure: I don't own AGI. WSHP nor AGI).