Activist Investors Offer Valuable Market Intelligence for Management

By JAMES PETERSON

(SENIOR WIRE) Seniors should be activist investors. We have an obligation to fight for our right to be heard by corporate management. Become an activist investor by reading corporate filings, staying abreast of current economic and financial news, communicating with corporate management, and attending corporate annual meetings if possible.

Investors should pay close attention to corporate fees paid to accounting practices and legal firms. Exorbitant fees without detailed justification could undercut your investments. You can find legal fees paid in a corporation’s public filings.

At annual meetings, you can request the CEO and/or board members give detailed explanations for these fees. If management has difficulty explaining fees, then you might want to involve federal oversight agencies, like the Securities and Exchange Commission (SEC).

If you are a senior investor whose lifestyle depends on healthy dividends from your investment, then stock activism must be your passion. If corporate response to your investment questions is not to your liking, then the SEC is the agency to contact.

The basis for many SEC complaints is a concern that CEOs are withholding important financial information from investors. A complaint of this sort is serious and will generate the attention investors need to decide whether to hold or sell their stock.

“Playing the SEC card,” as this tactic is called, signals you as an activist investor to corporate management. Today, if one should post an SEC letter to social media – then corporate management could respond to your concerns more quickly.

Another important way to develop skills as an activist investor is to submit operations and customer service reports to corporate management. If, say, you own airlines stocks, then you could report, favorably or negatively, on a flight and the personnel.

It is my experience that CEOs genuinely enjoy reading operations and customer service reports from all customers. They especially like favorable reports from stockholders. Negative reports can help management resolve problems before they have a negative impact on stock price.

Activist investors do not file these reports merely to annoy CEOs. We file them because we want a positive experience with the corporation. This is valuable market intelligence for management. It is a secondary benefit of a stockholder’s investment in the corporation.

Granted, not everyone has immediate access to CEOs for the purpose of reporting lackluster customer service. Instead, consider phone calls, emails, or Tweets to the corporation’s customer service department. Tweets to the CEO may also be helpful. As a last resort, I have sent handwritten messages to CEOs by postcard when I was without Internet access.

By whatever means, be an activist investor for best results. MSN

James Patterson is a financial literacy advocate based in Washington, D.C.