Invest in companies which care about shareholders
Few days ago, my sister (she used to be an auditor) told me a story about an annual general meeting of a company which happened few years back. She was asked to represent her audit company to attend the general meeting. It wasn’t a very pleasant experience because the annual general meeting was like a warzone.
A lot of the investors including some of the major shareholders were not happy that the big boss (the largest shareholder) was not present. The guy is actually the founder of the company. One investor even said that he (the investor) has been investing in the company for more than 10 years now and the so-called ‘boss’ has not attended the annual general meeting before….not even once. Any questions thrown to the company will be filtered by his subordinates and one of his sons during the meeting. The investor then threw a question which is quite ruthless and yet important.
“If he is not willing to spend few hours in this meeting with his fellow investors, what makes him think that we’ll trust him with our money and that he will do things which only benefit the shareholders?”
Since then, the company’s stock price has fallen drastically (partly because of the recession).
Actually, when I pick stocks, it is quite important to know how the companies handle their activities. A company which does thing that only benefit the big bosses and not the shareholders should never be bought. These companies should be left to rot unless……they really have very very good prospect that you simply don’t care what they do with the money.
Otherwise, you should just ignore them. One of Warren Buffett’s lessons is to run the company for the sake of the shareholders. If a deal is not going to benefit the shareholders, don’t go for it. Because at the end of the day, the listed companies are actually using the shareholders’ money to run their business and if you don’t do things which benefit the shareholders, investors will just run away…..and thus pulling down the overall ‘value’ of your company.
p/s……… by the way, did anyone buy KPJ? I told some people to buy but I didn’t go for it due to lack of fund. Hopefully some of you have actually bought it. 
If not, never mind. Opportunities will come again in the future 
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
I would also ask the opposite question: should investors care about the companies they invest in. It sounds like a silly question until you observe that none of the shareholders seem to care as they get ripped off in broad daylight by their Wall Street CEOs and their boards, starting with those leaders who spend millions of company $ to renovate and buy artwork for their offices, demand atrocious bonuses, and go on expensive junkets as the business goes bankrupt. I don’t recall Bloomberg reporting a single outraged EGM or any CEO or board member ejected by a shareholder revolt. No wonder they became penny stocks so quickly.
So I think on top of what you said, you also need to see if the actually shareholders care about the company.
@ horizon
It’s not easy and the ‘signs’ are not very obvious. But if the company keeps buying stuff for personal gains (like what happened to a popular company recently…cannot say which one since it’s insider news), then it’s not really good lah since those purchase will not benefit the shareholders.
Just pay attention to the things they do, and the money they spend.
@ Damien
Most investors care about the companies they invest in (myself included) but it’s hard for the shareholders to voice out against those big shots because …well, these are not the major shareholders. Their ‘voice’ is not that powerful 
Furthermore, if the investors don really care, they won’t even invest in those companies or to find out what these companies are doing with the money.
Any idea how can we find out the boss will care about the shareholders ? its kind of hard to get this info
horizons last blog post..Bursa Malaysia – KLCI Deceptively Strong