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"What is the shareholder" is a shareholder who seeks to improve its management.
We aim to improve corporate value by pro dividends, stock purchases and business reforms.
However, all proposals are not good for long term. Investors should see not only shareholder returns, but also impact on corporate growth, employees, and business investments.
In the news, you may want to see the value of "information shareholders".
Because it is a little strong expression, there may be many people who have the impression that they are an investor confronting with the company.
However, it is not just a confrontation, it is also a presence that questiones the company's capital efficiency and management policy.
In this article, we will organize the structure of the shareholder, the most commonly used method, and the caution to be considered by the investor for beginners.
What is "Investor Relations"?
Generally known as an activist investor.
It is意見d by giving opinions to corporate management as well as share.
For example:
- Increase dividends
- Sell unprofitable business
- Buy your own shares
- Change management
Shareholder is part of the company owner.
Therefore, if we meet certain conditions, we will express opinions to management through shareholder proposals and経営 rights.
Of course, it is not possible for shareholders to decide anything freely.
Board of Directors and Executives are responsible for management decisions.
However, shareholders are asked to say, “Is that management really using capital effectively?”
Three methods that affect the company
There are three major ways to influence the company.
| 手法 | 内容 |
|---|---|
| Shareholders | Pro dividends, selection of directors, and change of articles of incorporation |
| Interview | Talk directly with management to seek capital policies and business reforms |
| Voting rights | ing to the general meeting of shareholders |
It is a confrontation and delegation contest at the general meeting of shareholders.
However, there are many cases that interact with management under water.
Before going to the table, there may be changes in policies such as expansion, stock purchase, and business sale.
As an investor, it is important to see not only who is saying, but what are you looking for?
Why are you looking for?
There is a change in Japanese companies.
Previously, there were many companies that emphasize “in retention”.
Internal retention means that companies can store profits in-house.
Of course, the internal reserve itself is not bad.
This is because it is the originality of capital investment, R&D, and M&A.
However, if you do not use it for growth investment or shareholder returns by simply 、 cash, you can see that the market has low capital efficiency.
In particular, the following points are highlighted:
| Change | 内容 |
|---|---|
| Strengthening governance | Improve management transparency |
| ROE | Improve capital efficiency |
| Overseas Investors | Strong shareholder requirements |
"ROE**" is a "ROity"
Indicates how efficiently the shareholder’s money was changed.
In the Japanese stock market, PBR is more severe than before.
In this way, the proposal of the shareholder is easier to accept on the market.
Shareholder Benefits
There is a good aspect of the activist.
Improve corporate value
Re waste business and surplus funds.
For example, you may want to sell assets that do not generate profits and turn them into real-world investments and shareholder returns.
When viewed from the market, it leads to the expectation of sleeping capital.
Increase shareholder returns
There are cases where dividends and stock purchases increase.
In particular, companies with large amounts of cash may be considered to have a reduction area.
However, it is not always good if the reduction is increased.
If you’re looking for a growth investment to increase your return, you’ll have the potential to weaken your future competitiveness.
Increased management tension
Management makes it easy to be aware of capital efficiency.
ROE, PBR, shareholder capital cost, business portfolio, etc.
The market is looking there.
It is a time when the profit is not only profitable, but the profit is sufficient for the capital.
Demerits and Notes
On the other hand, there is a problem that overrides short-term profit.
Long-term investment may weaken
Reduction of R&D and capital investment
Even if the profit rate rises in the short term, if the future growth force falls, it is not a plus for long-term investors.
Compatibility with employees
There is a case where personnel can be organized by cost reduction.
Business reforms may be required, but if you ignore the impact of employees and business partners, corporate culture and field power may be damaged.
Impact on corporate culture
Short-term stock prices are subject to change.
Although it is a material that is easy to understand buying and selling your own shares, it is not a strong company.
In other words, it is important to balance "shareholder profit" and "long-term growth of the company".
How investors should see
Beginners are easy to understand by looking at the following perspectives:
- How to make a proposal
- Short-term profit or long-term improvement
- Is there too much cash in a company?
- Is management responsible?
It is not a good company just by entering the activist.
Stock price is easy to move in short term.
It is because the expectation of increasing sales, buying own shares and selling business.
However, the important thing is: “Is the company value really improved?”
If the proposal is effective for surplus funds and organizes unprofitable businesses, it may be evaluated.
On the other hand, if you want to sharpen your growth investment and temporarily increase your stock price, you will still have questions in the long term.
Points when looking at news
In the news of the shareholder, it is better not to judge only by heading "interest".
What should be seen is the contents of the proposal.
| See Points | How to check |
|---|---|
| Capital Policy | Validity of cash, dividends and stock purchases |
| Business reform | Is it necessary to organize unprofitable business? |
| Management Team | Why is the right policy? |
| Long-term growth | Do you have too much research and development or capital investment? |
It’s not just a big shareholder whose market is favorable.
It is a proposal that improves corporate capital allocation and increases future profitability.
If you find this, the reading of the activist news is quite different.
- Investors seeking management improvement
- Pro dividends and business reforms
- It may lead to shareholder returns and capital efficiency improvement
- However, short-term profit devには is necessary
The shareholder may seem tedious to the company.
However, it is possible to increase capital efficiency.
In the news, let's have a habit to see the purpose of the proposal.