I recently wrote an article published exclusively on Seeking Alpha, entitled, “Why GE’s Buyback is a Raw Deal for Shareholders.” Share repurchase programs are trumpeted out and rarely questioned. I believe that many, but not enough, investors understand that buybacks can be largely self-serving and hardly in shareowners’ best interests. I encourage you to read the above linked story (link visible in full article view) on GE and note the fact that the impact of share buybacks when looking at shares outstanding is very dismal; stock price performance is equally unimpressive.
The topic of corporate governance excites few, far fewer than it should, and of course much fewer than say a big (but ultimately boring) story like Facebook’s (FB) pending IPO; though even Facebook and also Google (GOOG) have some newsworthy corporate governance issues. Corporate governance is only hot when there is an Aubrey McClendon type figure making the news — Chesapeake Energy (CHK) shareowners deserve to be outraged — or when a shareowner proxy vote overcomes all odds and leaves corporate directors and management in an awkward position, think Citigroup (C) getting a “no” on its say-on-pay.
General Electric’s (GE) annual shareowner meeting is tomorrow (Weds.) in Detroit. I urge those that haven’t voted to do so as soon as possible today to ensure votes are counted. To help make readers better informed and to generate discussion, I prepared two write-ups surrounding GE’s annual meeting: (1) a review of each item for vote on its proxy, and (2) a look at why GE is undervalued. [Hyperlinks visible in full article view.] It’s unmistakable to me the market has been efficient in valuing GE shares when considering GE’s deficient corporate governance and management. Please continue reading even if you have read the above two linked articles.
I have heard from fellow value investor Jacob Wolinsky (of ValueWalk) that Paul Sonkin, manager of the Hummingbird Value hedge fund, believes proxy statements are the most underrated of statements; Wolinsky perhaps inspired by that says rather than refer to the 3 key financial statements it really should be “4.” I couldn’t agree more. As I have been doing since 2010, I prepared an in-depth review of GE’s 2012 proxy statement. It really is imperative that investors read their companies’ proxies and not only vote more often but of course vote better informed.
Furthermore, with more governance and shareowner-rights minded investors gathering at sites like the United States Proxy Exchange, MoxyVote, Proxy Democracy, as well as TheShareholderActivist, we may gain enough critical mass to do more reviews like mine of GE, and light a fire under the large institutional holders that too often vote with management. Please see my review of GE, which appears exclusively on Seeking Alpha (dot-com). The comments there show that investors do care and are voting. The future is bright with Seeking Alpha recently hitting 1 million registered readers and Moxy Vote hitting the 100,000 mark.
Japanese stocks have done very well in 2012 and of course the weakening yen has increasingly more to do with the rally; deservedly so for the people of Japan. Otherwise, and unless Japanese stocks continue to do well, they could become neglected once again. Not necessarily a bad thing for value investors, and regardless of the rally to-date, valuations in Japan remain extremely compelling. Allow me to introduce my book, Investing in Japan: No stock market is as undervalued and as misunderstood as Japan, just released this month.
I submitted the letter that follows below to the SEC on February 6th, largely in response to the January 19th letter 23 co-signers amongst business lobby groups sent to the SEC in regards to the Dodd-Frank provision about disclosure of median worker compensation and the ratio of median worker to CEO compensation. The SEC has understandably been very busy on numerous fronts and thus my letter has yet to appear among the comment letters submitted to the SEC (none have appeared since the Jan. 19th letter). Rather than wait for its eventual publication, I wanted to share my thoughts with readers without further delay.
Serendipitously on Martin Luther King, Jr. Day, I was able to relay great news for shareowners of General Electric (GE) and all publicly-traded companies. The SEC ruled the prior week that GE cannot omit my critical proposal (hyperlink appears in full article view; see page 2 of PDF) requesting its board reexamine dividend policy. GE has since resubmitted dubious arguments to the SEC seeking a reversal of opinion so that it can kill my proposal and ensure the truth of my findings and the merit of my resolution do not appear before us shareowners.
As I pen this article on this day of remembering/honoring Martin Luther King Jr., an icon of activism, I am elated to share great news for General Electric (GE) and all public equity shareholders alike: the Securities and Exchange Commission has informally ruled that GE cannot omit my proposal from its 2012 Annual Meeting and proxy statement. In short, my proposal involves allowing shareholders to vote whether GE’s board should reexamine the company’s dividend policy. This may not sound terribly important in light of MLK’s efforts and accomplishments, but believe me, in light of the injustice that has taken place at GE (and at other listed companies), the SEC’s ruling is significant. Allow me to explain some of the procedure and reasoning behind my proposal, as well as GE’s reaction thus far.
Heads up to readers that I have an exclusive article about GE published at Seeking Alpha, “General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully.” Shareholders and potential investors will be pleased to know that in fact, GE has a good problem on its hands of a much improved balance sheet, large cash pile, and robust cash flows. Now, what to do with the excess cash? See the preceding hyperlink for the article. Also, bookmark or visit back to see all of my articles on General Electric discussing matters pertinent to shareholders.