Last Updated – April 10, 2023 2023
Increasing the Odds of Success
Active Shareholders
As shareholders of publicly traded companies, we’re all part owners and have a vested interest in seeing them succeed.
There are thousands of companies competing to attract new shareholders which are crucial to attaining and sustaining higher stock prices. In highly speculative sectors like junior mining/exploration, there’s a very limited amount of speculative money. It is vital that a company properly promote itself in order to attract some of this limited money.
The main reason two companies with similar projects have significantly different market capitalizations is one has attracted more money flow to it. Due to the simply laws of supply/demand, the outcome of higher demand is a higher stock price.
Due to the regulations imposed on publicly traded companies and assuming one’s profession/qualifications doesn’t prevent one from being able to do so, shareholders are in the best position to fully tell the company’s potential.
Types of Shareholders
In my books, there are only 2 types of shareholders:
1. Non-active shareholders – shareholders that are passive & let the company sink or swim on its own (the majority of shareholders fall in this category)
2. Active shareholders- shareholders that actively take part in a company’s success
What an Active Shareholder Does
The following are items an active shareholder does:
- Properly & professionally promotes the company- posts about the company & has discussions about it with others on social media sites. Many new potential investors often do quick searches on social media to see what people are saying about their new investment idea. If posts from the same relentless bashers outnumber the ones from non-bashers, it can falsely and pre-maturely give a bad impression of the company. Properly & professionally promoting using facts, comparisons, justification, substance, etc., etc. provides effective exposure.
- Provides suggestions & constructive criticism- small companies are often under-staffed to minimize overhead costs so they can’t think of everything. Providing suggestions and constructive criticism with solutions allows a company the potential to improve. Providing guidance, suggestions or constructive criticism directly to to management is important. Don’t waste one’s time with useless Investor Relations people as they aren’t in a position to fix anything and are usually jobs that are contracted out to specialized firm. If the questions are things that a clueless Investor Relations person can answer, don’t waste management’s valuable time.
- Provides feedback- providing both good and negative feedback allows a company to know what it’s proficient at and what it needs to improve. If there are things that a company did well, let them know so they continue on the same path. If they’re doing something poorly, let them know so they can fix it. Remember, management is voted on at every yearly AGM so it is in their best interest to listen to shareholders as they hold the voting power.
- Supports other active shareholders- providing a simple “like” / “thumbs up” on content or a quick reply goes a long way. This provides valuable feedback, shows appreciation and encourages active shareholders that dedicate valuable time to continue/do more. Some websites have a filter option that allows one to only view posts that received the highest ratings. If people don’t “like/thumbs up” on content then great posts may be missed when such filters are used. Also, resharing/reposting/retweeting worth while posts helps ensure great content gets the proper exposure.
What an Active Shareholder does NOT Do
Since active shareholders want their investments to succeed, they do not do things that negatively impacts their investment’s success.
The following are items an active shareholder does NOT do:
- Publicly complain about management or the company (this negatively impacts shareholder value)
- “Pump” a stock with huge statements and no justification/substance. Pumping a stock makes it look like a company is a “pump & dump” candidate which is a red flag. Intentionally pumping a stock in order to sell into the increased liquidity is ILLEGAL.
- Bash other similar stocks to make one’s investment idea more attractive to new investors (an active shareholder wisely uses the time to properly promote the company they own)
- Flip the stock (sell high and rebuy lower). Penny flippers kill the momentum right when it’s most required to attain much higher prices. If a stock has difficulties in gaining traction and trending up, it is NOT an attractive investment to some new investors regardless of its potential. If a stock is not able to attain higher prices with ease, there is no domino effect where success leads to further success. It’s been proven many times that over time one is more likely to maximize profit by holding a winner through the ups and downs than trying to time the market correctly by swing trading/flipping.
Conclusion
A company’s shareholder base consists of people from just about every profession and career field all over the world. There are shareholders that have more experience/knowledge or have skills that the company’s management doesn’t have. Since the odds are stacked against success, the odds are more favorable when everyone works like a team with the same goals.
There’s also a domino effect that happens as success occurs. Every increase in the stock price opens the door for a company to further spring board shareholder value higher. Higher stock prices provide an opportunity to effectively promote and increase the budget of exploration campaigns while minimizing share dilution. Success usually leads to further success.
The role that active shareholders play in an investment’s success should never be under-estimated as they’re extremely important for the success of publicly traded companies. The smaller the market cap, the more crucial they are for success.
When one’s hard earned money is at stake, it’s in one’s own interest to take an active role in one’s financial success.
