When you buy shares, you are an owner which entails you to vote at shareholder’s meetings. The more shares you own the greater the ability to influence the company. Over the past few months Elliot Management Corp.- an hedge fund which over the years has done very well has been buying shares of BHP Billiton which is an Anglo-Australian miner (one of the largest miners in the world). Similar to all large investors, Elliot would like to see the share price go higher and according to a Reuters report written by Jamie Freed and James Regan Elliot’s suggestions include spinning off the US oil division into a new company and ending dual head offices to unlock billions in value.

Since the plans are not the same as the strategy employed by management which is something more than the desire for commodity prices to increase and when they do and stay high, the company will rake in the profits. The management says while the ideas are interesting, they are flawed and the results would be costly to implement. The suggestion outlined billions, but when management runs their numbers it seems there is a downside risk or possible losses. If you are an average shareholder reading about the proposal, you would side with management.

Linking to dividend paying stocks, suggestions are always welcomed by shareholders because if you do not like the strategy or the management, you always have the ability to seek alternatives or consider buying  other companies. In the government when there is a vote in the House or Senate, somebody counts the votes and if they have the votes then the bill will pass. If they do not have the votes, the vote dies. As a shareholder, you can have many ideas, however if you do not have the votes, the ideas of management will continue. When you buy your shares, after you done your homework, one of the issues will be in the annual report voting, how many shares does management tend to win by.

There are more questions than answers, till the next time – to raising questions.