shareholder privileges

Warren, Charlie, and Us: The Rights of Owners 
AP Photo

The hallmark of our investment strategy is ownership of companies whose outlooks are favorable, in our view. A share of stock is a piece of the action: ownership of a fraction of an enterprise.

We own businesses in very old lines of work, like manufacturers of farm equipment. And companies in new lines of work, like cloud services. We are in software and chipmakers, miners and medicine.

Owners have rights. We elect directors. We receive our share of dividends paid. We get annual reports, and have the right to attend shareholder meetings. Most of us pay little attention to the trappings of corporate governance, with one exception.

Warren Buffett holds one of the largest annual shareholder meetings on the planet, with tens of thousands of people descending on Omaha for the festivities.

On the first weekend in May, information about Berkshire subsidiaries and products they offer is available at the meeting venue. You can buy everything from GEICO insurance to treats from Dairy Queen and learn about companies as diverse as Burlington Northern and Clayton Homes. Did we mention? Shareholders also get discounts at Nebraska Furniture Mart and Borsheims.

At the May meeting, Buffett and other key people will entertain questions from shareholders for hours, before conducting the business of the shareholder meeting. Some say that Buffett is among the most successful investors in the history of the world; at 94 years of age, there are only so many more chances to witness him at this event. (Charlie Munger, former vice chairman, passed away in 2023 at age 99.)

Clients, if you have an interest in being part of this, you’ll need shareholder credentials. In past years, there has been a postcard to order those included in the Annual Report, or you can let us know if we can help you obtain credentials. Stay tuned for more details in the weeks ahead.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time. Companies mentioned are for informational purposes only, and this communication should not be considered a solicitation for the purchase or sale of their securities.

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2024 edition: Warren, Charlie, and Us on the Rights of Owners – 228Main.com Presents: The Best of Leibman Financial Services

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Heavy is the Head that Wears the Crown

© Can Stock Photo / tashka

Pop quiz: if Joe Smith from Detroit works for General Motors, who is at the top of his chain of command? His boss’s boss’s boss’s boss, in other words? (I pick GM as a random example, but this exercise is true of any publicly traded company.)

If you own any shares of General Motors, the answer is you, personally. Makes you feel pretty important, right?

Of course, there are some caveats. General Motors has over 1 billion shares of stock floating around, and this is not an unusually large amount for an exchange-listed company. If you only own, for example, 1 share of GM stock you have less than a one-billionth part of the collective ownership authority over the company. Still, as a stockholder you are entitled to a have a proportionate voice in how the company is run, however small that voice may be. It is a powerful idea, and this idea of shared ownership is a cornerstone of our modern economy and way of life.

The most visible parts of your rights and responsibilities as a shareholder are, inevitably, the proxy voting materials that you may periodically receive as a stock owner. Your shares entitle you to vote on the company’s board of directors, as well as other significant decisions that the company may make from time to time.

For smaller investors such as you or I, shareholder materials can sometimes be more of a nuisance than anything else. Even if we got together with all of our clients and voted together as a bloc, we still would not command enough shares to influence a shareholder vote much. Moreover, we would generally want to stick with the default recommendation of the company management. If we disagreed with the job management was doing, we would not want to invest in the company in the first place! There are sharks out there in the investment world that look to gobble up companies and take over their management, but in here we are all pretty small fish—we just look for successful companies that we can swim along with. Most of the time, we are content to leave shareholder decisions up to the big fish.

That said, it does happen occasionally that a vote or shareholder election comes up that may have some effect on you personally. We keep an eye on what shareholder materials get sent out so that we can get in touch if something comes up that you ought to act on.

The bottom line is that the privileges of stock ownership can wind up translating into a lot of mail, and it can be difficult to sort through it all sometimes. Clients, if you receive any shareholder communications that you do not understand, please do not hesitate to pick up the phone or email us for help making sense of it.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Stock investing involves risk including loss of principal.