Why Organic is better for Stocks (Part 2)
The system of quarterly reviews should suffice for investors with choices to know if their stocks are properly stewarded. Executive statements about the reasons to sell companies often hide values which buyers realize shortly thereafter.
Investors should demand forward-looking plans to stay invested in stocks. Large financial institutions do this as matters of course; small investors should demand equal treatment. PK and OTCBB stocks, and even private holdings in small and medium enterprises are preferable to allowing savings to be manipulated mysteriously. Strategic advantages of mergers, acquisitions, and sales cannot be ruled out altogether, but some of these moves may be to assuage egos or to chase mirages-with your money. Customer integration, dedication to continuous improvement, and prudence in cash management should be adequate to achieve steady trends of business results. Some transactions in stocks are intentionally short-term, but the real benefits should be in long term commitments of funds to excellent and professional teams.
Transparency Always Helps Stocks
There is a case to keep information about company strategies confidential and away from inimical interests. However, the benefits of secrecy which surrounds M&A negotiations are overstated. All investors should know well in advance if changes of stock ownership are proposed, and there should be limits on the rights of simple majorities to make substantial changes unilaterally.
We would like to know what you think about the relative merits of organic growth versus M&A activity. Have you participated in these transactions, and do you know of cases in which stocks of an acquirer have appreciated faster than they did when the company was on its own? Views about prospective and recent moves to acquire or to sell stocks will be especially appreciated.