Anyone can buy stock in a public company, but not all shareholders are equally committed to a company’s long-term success. In an increasingly fragmented financial world, shareholders’ attitudes toward the companies in which they invest vary widely, from time horizon to conviction. Faced with indexers, short-term traders, and activists, it is more important than ever for businesses to ensure that their shareholders are dedicated to their missions. Today’s companies need “quality shareholders,” as Warren Buffett called those who “load up and stick around,” or buy large stakes and hold for long periods.
Lawrence A. Cunningham offers an expert guide to the benefits of attracting and keeping quality shareholders. He demonstrates that a high density of dedicated long-term shareholders results in numerous comparative and competitive advantages for companies and their managers, including a longer runway to execute business strategy and a loyal cohort against adversity. Cunningham explores dozens of corporate practices and policies—such as rational capital allocation, long-term performance metrics, and a shareholder orientation—that can help shape the shareholder base and bring in committed owners. Focusing on the benefits for corporations and their investors, he reveals what draws quality shareholders to certain companies and what it means to have them in an investor base. This book is vital reading for investors, executives, and directors seeking to understand and attract the kind of shareholders that their companies need.
ISBN-13: 9780231198806
Media Type: Hardcover
Publisher: Columbia University Press
Publication Date: 11-03-2020
Pages: 264
Product Dimensions: 6.10(w) x 9.10(h) x 1.10(d)
Lawrence A. Cunningham, editor and publisher since 1997 of The Essays of Warren Buffett: Lessons for Corporate America, is the Henry St. George Tucker III Research Professor at George Washington University. His books include Berkshire Beyond Buffett: The Enduring Value of Values (Columbia, 2014) and Margin of Trust: The Berkshire Business Model (Columbia, 2020).
Table of Contents
Prologue: The Shareholders Managers Deserve
Part I. Why Quality?
1. Meet the Quality Shareholders
2. Comparative Advantages
3. Competitive Advantages
Part II. Quality Engagement
4. The Corporate Message
5. Annual Letters
6. Annual Meetings
7. Quality Quarterly Contact
8. Useful Metrics
9. Capital Allocation
10. Trackers and Spins
Part III. Pivot Points
11. Director Selection: Stewards, Advocates, or Passivity?
12. Managerial Performance: The Overpaid and Underpaid
13. Shareholder Voting: One Each, Dual Class, or Quality?
Epilogue: Getting Indexers and Activists Going Quality
Appendixes
A. Research, Method, and Names
B. Selected Quality Shareholder Statements
Acknowledgments
Notes
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