No. of Recommendations: 1
Umm:
Of course the CEO and board should do things that will raise the price of the stock, like grow revenues and earnings, etc. That isn't what I was talking about though. I was talking about doing things that are not about the business, but are instead done just to influence the price of the stock.
So you are against CEOs having quarterly conference calls with stock brokers and holders? You are against CEOs or board members participating in interviews in print or audio or TV? Or do you somehow think they are doing this for some reason other than increasing the value of their stock? Please note, if your answer is "well its their job to keep stockholder's informed about how the business is doing, they don't do it to keep the stock price up" then please think: why is that their job? Does it somehow improve the return on their stock holder's investments? And if that is why it is their job, then isn't it ultimately that they are supposed to keep us informed so people don't dump their stock because they don't understand why they should keep it?
It is not at all clear to me that ANYTHING that influences the price of the stock is not also about the business. Either it is keeping the stock high enough to reflect the actual value of the stock, and thus fulfilling their requirement to maximize shareholder's return, or they are flogging the stock so that people are tricked into paying too much for the stock, in which case they risk having a lower stock price in the future because nobody believes them anymore.
Do you think Buffett's amazing annual meetings are BAD for the stock price? I certainly don't think so. Do they help the businesses run better? Well they certainly take a lot of insanely valuable resources such as Buffett's time and the time of board members and Greg and Abel and so on away from figuring out how much more sugar to put in the blizzards or whether to use real chocolate or not in the See's candies.
Even Warren Buffett does stuff to keep the stock price up. Including selling hard the idea that he wants only to keep the stock price reflecting the true value of the company, because, you know what? That will keep the stock price highest in the long run. And if you don't think that is true, well, have you looked at a time series of the price of BRK stock lately?
Keeping the stock price up is the JOB of the board and the C-suite. It is why people buy stock in the first place. The only time you should not do something to keep the stock price up is when it won't actually work in the long run.
So if someone issues dividends because it will make the stockholders happy, they are at least trying to do their job. Maybe they are not doing good job, but maybe they ARE doing a good job. I buy AAPL. I buy NVDA. Their trivial little dividends cost less than a coat of paint or a thank you note in the long run, I'd be a fool not to buy these stocks if they are going to go up.
And if someone like me does actual math to see whether retaining earnings has been keeping the stock price high or not, then I am doing my job at supporting Warren et al. in doing their job of having policies that keep their stock price up.
R:)
