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April 12, 2012 – Comments (11) | RELATED TICKERS: GOOGL

Google is splitting its shares, but at the same time cementing the 3 founders' grip on the company forever. Who wants to own a piece of a company, but have no say in its management? Owning stock should mean having a say!

Of course you can argue that the current situation is not really that different (the 3 founders together have about 66% of the voting power today), but their power was eroding due to stock grants and acquisitions. As an investor, you could have hoped that in the near future the founders' voting share would be below 50%. With that hope gone, forever, I think it is best to sell now.

Consistent with my opinion, I will open a red-thumb on GOOG as soon as possible.

11 Comments – Post Your Own

#1) On April 12, 2012 at 5:25 PM, portefeuille (98.93) wrote:

My fund just sold 10 GOOG shares. Remaining are 10 GOOG shares with break-even of around -$155.44, thus the GOOG position is in the green by around 10 * ($654.50 - (-$155.44)) = $8099.40. I think I will keep those shares for a few months.

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#2) On April 12, 2012 at 6:30 PM, rofgile (99.00) wrote:

Why sell?

Meanwhile, Google said its first-quarter profit rose 61% as the Internet giant saw a sharp increase in interest in advertising in its dominant search engine.  

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Could you ever have a majority control of any of your stocks?  Is google likely to ever be bought out (the only company that could have a chance at that is APPL, and that would be too monopolistic of a situation).

So.. what is the point?  

I'm trying to figure out how much Google's dividend is going to be.  I was planning on holding GOOG shares until 700-800/per share. 

 -Rof 

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#3) On April 12, 2012 at 6:33 PM, rofgile (99.00) wrote:

Ahh. It is a stock dividend that is the split, not a cash dividend.

Nevermind. 

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#4) On April 12, 2012 at 9:24 PM, awallejr (35.73) wrote:

If you do sell, sell because you have concerns about the company's future profitability.  I don't own a single share of stock in any company that I have any meaningful say.  Unless you are Buffett or a large fund manager, I wouldn't worry about your lack of "say."  What you need to ask is do you have confidence in the 3 founders' ability to continue to grow the company.

Will be the same thing with Facebook. Zuckerberg will have complete control, and he would make me more nervous as an investor especially when he says things like "profits aren't important."

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#5) On April 13, 2012 at 12:03 AM, Valyooo (33.72) wrote:

awallejr,

My initial reaction was what you said.  But, think about it.  What if they restricted all voting rights for everybody except the 3 founders?  Then they could legally pass a rule saying "only the three founders get any rights to any of the profits", and there would be no objection because they are the only ones with a say in it.

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#6) On April 13, 2012 at 12:41 AM, awallejr (35.73) wrote:

Except there are always the Courts.  Lawsuits abound.  Fiduciary duties and all. Plus the owners would only cost themselves a fortune for bad decisions since people would dump their stock.

Seriously, most individual investors have pretty much zero say in their holdings anyway.  Think my 1,000 shares of T gives me any real say?  Of course not.

Worry about profitablity since that will dictate a stock's price more than anything.

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#7) On April 13, 2012 at 11:39 AM, leohaas (30.09) wrote:

"Could you ever have a majority control of any of your stocks?"

No! Of course not. But that is not at all the point.

The point is that the 3 founders will forever determine what happens in the company. All other shareholders will have no say at all. Is that not clear?

"Worry about profitablity since that will dictate a stock's price more than anything."

Exactly. That is what this is ultimately about. I strongly believe these 3 guys are technological visionaries, but I am not yet convinced about them as businessmen!

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#8) On April 13, 2012 at 12:46 PM, TheDumbMoney (67.21) wrote:

Leo, he're my response:

http://caps.fool.com/Blogs/google-update/726340

Valyooo, actually whenever a stock refuses to pay a dividend that is a refusal to give any profits to the shareholders.  This is often combined with the continual granting of options and even the payment of salaries to executives and other employees!   :-)

http://dumbmoney.tumblr.com/

 

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#9) On April 17, 2012 at 6:26 PM, leohaas (30.09) wrote:

Now THIS is what I mean!

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#10) On April 17, 2012 at 11:08 PM, awallejr (35.73) wrote:

It actually is nice to see.  Tired of all these CEOS getting large raises while their employees get none.  I always vote against compensation plans but my small holdings amount to little.  I'd be happy to do Pandit's job for way less than he gets now and I submit I would do just as well a job if not better.

These obscene CEO compensation packages really do need to stop.  The problem is the Board of Directors are CEOS of other companies so it because nothing but a club.

"Citi's Board of Directors takes the shareholder vote seriously, and along with senior management will consult with representative shareholders to understand their concerns."

What is hard to understand? Try shoveling ditches.

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#11) On April 17, 2012 at 11:09 PM, awallejr (35.73) wrote:

because=becomes

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