Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
You're struck by the fact that the board decided that the cost of being a publicly-traded company was greater than the value, so they went print?
The silliest element of the story, speaking of costs and benefits, is the size of the stake in First West Virginia Bank held by some of the funds. DFA Tax-Managed Small Cap (DFTSX) owns just under 500 shares, rather less than $10,000 worth. It's a $2.2 billion fund. In order for their ownership stake in FWV to raise the fund's returns by one one-hundredth of one percent, it would have to return 2200%.
The manager most serious about the stock is Joel Tillinghast who, with a million dollar investment, owns 3% of the outstanding shares. On the other hand, he is running a $40 billion fund. So it would take $400 million to get a 1% rise, $40 million for 0.1% ... okay, a mere 400% rise would add 0.01% to FLPSX's NAV!
David, you raise a very good point. Why on earth would managers own any stock that will have truly no impact on their fund? I have noticed this sort of thing before, and it continues to baffle me. This is especially true when they may own a bunch of these teeny positions, where the fund has to account for expenses associated with research, buying, and holding reporting.
Thanks for the replies. Holding company for Progressive Bank. Ten offices throughout WV and Ohio, but mostly in the Northern Panhandle: Wheeling and environs, and those two across the river. The explanation from the Board about de-listing just sounds like a pretext. They're not making much money, or this would not be happening, eh?
Off-topic but, Continuing with the never saw such a thing theme:
DENVER (CBS4)– REI, the outdoor gear store for nearly any sport, will not sell you anything on Black Friday, either in its stores or online. Instead, the retail giant wants shoppers to get outside and enjoy the day.
REI will be closing all 143 of their stores the day after Thanksgiving, also known as Black Friday. REI’s Message: Instead Of Buying New Skis, Go Skiing Shoppers who try to access REI’s online site on Black Friday will be met with a sign that instructs them to go outside and enjoy the great outdoors. There will also be links to outdoor activities in the local neighborhood.
And haven't seen such a thing for awhile.Trigger warning: Washington Post Editorial Board's Take on the Possible Budget Deal "Last, but not least, the deal is a small victory for governability, showing that Republicans and Democrats, both houses of Congress and the executive branch can still work together, if only because they have run out of alternatives."
.....run out of alternatives. There are no alternatives when one Party's entire agenda is to just stop everything in its tracks. Because the Prez is not of their own Party.
Why on earth would managers own any stock that will have truly no impact on their fund?
I have wondered about about this issue, too. Mathematically, if a funds holds more than 100 securities, some of them will have have less than 1% impact on the performance of the fund. There are a very large number of funds that hold over 100 stocks, including some good mutual fund funds from Grandeur Peak, Wasatch, Primecap, T. Rowe Price, etc.
Why on earth would managers own any stock that will have truly no impact on their fund?
Thanks BobC for a provocative question. Purely academic to me, since I own no individual stocks.
Some thoughts ...
- Perhaps for the same reason some of us open small positions in funds. Ownership elicits a degree of scrutiny that merely viewing the fund on a watch list may not. We learn more about the how fund operates and how it performs relative to our existing holdings should we decide to increase that position later - perhaps at a more attractive price.
- I'm wondering too if having a "foot in the door" through a small holding allows a fund better access to a company's management, shareholder meetings and reports which it might not otherwise enjoy. All with an eye to adding to the position later.
- Very large funds need to move slowly in acquiring new positions so as not to drive-up the price of the stock they are acquiring. Acquiring small stakes in 5 different companies will have less impact on markets than if the fund invested all those assets in a single company.
Comments
The silliest element of the story, speaking of costs and benefits, is the size of the stake in First West Virginia Bank held by some of the funds. DFA Tax-Managed Small Cap (DFTSX) owns just under 500 shares, rather less than $10,000 worth. It's a $2.2 billion fund. In order for their ownership stake in FWV to raise the fund's returns by one one-hundredth of one percent, it would have to return 2200%.
The manager most serious about the stock is Joel Tillinghast who, with a million dollar investment, owns 3% of the outstanding shares. On the other hand, he is running a $40 billion fund. So it would take $400 million to get a 1% rise, $40 million for 0.1% ... okay, a mere 400% rise would add 0.01% to FLPSX's NAV!
David
Continuing with the never saw such a thing theme:
DENVER (CBS4)– REI, the outdoor gear store for nearly any sport, will not sell you anything on Black Friday, either in its stores or online. Instead, the retail giant wants shoppers to get outside and enjoy the day.
REI will be closing all 143 of their stores the day after Thanksgiving, also known as Black Friday.
REI’s Message: Instead Of Buying New Skis, Go Skiing
Shoppers who try to access REI’s online site on Black Friday will be met with a sign that instructs them to go outside and enjoy the great outdoors. There will also be links to outdoor activities in the local neighborhood.
http://denver.cbslocal.com/2015/10/27/reis-message-instead-of-buying-new-skis-go-skiing/
And haven't seen such a thing for awhile.Trigger warning: Washington Post Editorial Board's Take on the Possible Budget Deal
"Last, but not least, the deal is a small victory for governability, showing that Republicans and Democrats, both houses of Congress and the executive branch can still work together, if only because they have run out of alternatives."
https://www.washingtonpost.com/opinions/a-fiscal-truce-thats-good-enough-but-not-perfect/2015/10/27/054d0c66-7cd2-11e5-afce-2afd1d3eb896_story.html?wprss=rss_editorials
Some thoughts ...
- Perhaps for the same reason some of us open small positions in funds. Ownership elicits a degree of scrutiny that merely viewing the fund on a watch list may not. We learn more about the how fund operates and how it performs relative to our existing holdings should we decide to increase that position later - perhaps at a more attractive price.
- I'm wondering too if having a "foot in the door" through a small holding allows a fund better access to a company's management, shareholder meetings and reports which it might not otherwise enjoy. All with an eye to adding to the position later.
- Very large funds need to move slowly in acquiring new positions so as not to drive-up the price of the stock they are acquiring. Acquiring small stakes in 5 different companies will have less impact on markets than if the fund invested all those assets in a single company.