YouTube, Facebook Empower Small Investors
Article published on Mar 17, 2008
By Hannah Glover
YouTube and Facebook may be part of the reason investors in eight Fidelity funds will vote by Wednesday on whether the products should screen out holdings linked to genocide inDarfur and other
conflict-ravaged corners of the world.
Grassroots organizations including Save Darfur Coalition’s Divest for Darfur1 and Investors Against Genocide2 also use their own websites, which make it easy for those interested to sign petitions, send e-mail letters and keep up-to-date on upcoming corporate actions.
“The value of [electronic media] is that it’s rapid,” says Allyn Brooks LaSure, spokesman for the Save Darfur Coalition. LaSure says 130,000 users signed the group’s online petition asking firms to shed shares of companies that may profit in the region.
Activism isn’t limited to genocide or social issues, analysts say. Fund companies can expect activists of all stripes to take advantage of interactive online media, including blogs, social networking sites and e-mail campaigns to promote their message far and wide among individuals who may not otherwise even know how mutual funds work.
“In general, individual investors are being educated by watching the activist battles that are going on,” says Eric Jackson, an activist shareholder and manager of Ironfire Capital, who is credited with pushing the ouster of chief executives at both Yahoo and Motorola by harnessing the power of the Internet.
“The Web, in general, is a very powerful communication tool,” says Laura Lutton, senior analyst overseeing fund governance issues at Morningstar. “You’re seeing fund companies shift a lot of their communication with shareholders [online], so we should not be surprised to see shareholders using that mechanism to communicate with one another.”
It’s the immediacy of these types of media that makes it possible for the average person to be heard, says Susan Morgan, spokeswoman for Investors Against Genocide, a group that launched its presence online in January 2007.
The group has relied completely on electronic communication to make itself known among shareholders. So far, 10,000 people have signed up for the group’s e-mail list, she says. With little more than its electronic campaign, the organization has submitted more than 50 shareholder proposals, she says.
The low cost of electronic communication, compared to traditional campaigns that rely on newspaper, television or even billboards, helps level the playing field between billion-dollar investors and those with only a few bucks.
“It really doesn’t matter what quantity of shares you own as much as the argument you are putting forward,” says CEO-topplerJackson. In the case of
Yahoo, for example, he says he owned — and still owns — only 96 shares.
Jackson says
that the entire effort, including travel to shareholder meetings, cost him about
$2,000. Traditional campaigns can cost much more.
The best activist organizers can hope for is that their cause goes “viral,” which means that it develops a cult-like following and spreads rapidly.
For example, last year Darfur activists bought high-priced television time to air a controversial ad in which an advisor consulting with a couple congratulated them on “making a killing in Darfur3.” Although the ad no longer runs on television, it and others, some of which name companies specifically, live on through YouTube4.
Likewise, MySpace members have picked up theDarfur cause. A quick search for pages including keywords
“divest” and “Darfur” returned more than 200
hits late last week. Such phenomena show the marketing efficiency the Internet
offers in reaching the most relevant audience compared to the more traditional
process of print and mail campaigns, which Jackson likens to “herding cats.”
Shops should prepare to experience and respond to more such electronic campaigns, says Jackson, who notes Securities and Exchange Commission chairman Christopher Cox’s support of online shareholder chat rooms.
Last May, at a conference, Cox called for the industry to wield technology as its weapon of mass destruction in the “war against complexity,” and touted the SEC’s own advocacy of eXtensible Business Markup Language (XBRL), or “tagging” of federal filings, as one example.
Beyond just pushing proxies, the Internet has the potential to transform the way investors communicate, Morningstar’s Lutton says. Chat rooms and online communities such as the Vanguard Diehards5, a group of amateurs who offer advice on how to construct Vanguard portfolios, can both educate people and push their own agenda, she notes.
Other topics such as executive compensation are also possible topics for shareholders to rally around. “Information about investments is a lot more accessible now,” she says.
Article published on Mar 17, 2008
By Hannah Glover
YouTube and Facebook may be part of the reason investors in eight Fidelity funds will vote by Wednesday on whether the products should screen out holdings linked to genocide in
Grassroots organizations including Save Darfur Coalition’s Divest for Darfur1 and Investors Against Genocide2 also use their own websites, which make it easy for those interested to sign petitions, send e-mail letters and keep up-to-date on upcoming corporate actions.
“The value of [electronic media] is that it’s rapid,” says Allyn Brooks LaSure, spokesman for the Save Darfur Coalition. LaSure says 130,000 users signed the group’s online petition asking firms to shed shares of companies that may profit in the region.
Activism isn’t limited to genocide or social issues, analysts say. Fund companies can expect activists of all stripes to take advantage of interactive online media, including blogs, social networking sites and e-mail campaigns to promote their message far and wide among individuals who may not otherwise even know how mutual funds work.
“In general, individual investors are being educated by watching the activist battles that are going on,” says Eric Jackson, an activist shareholder and manager of Ironfire Capital, who is credited with pushing the ouster of chief executives at both Yahoo and Motorola by harnessing the power of the Internet.
“The Web, in general, is a very powerful communication tool,” says Laura Lutton, senior analyst overseeing fund governance issues at Morningstar. “You’re seeing fund companies shift a lot of their communication with shareholders [online], so we should not be surprised to see shareholders using that mechanism to communicate with one another.”
It’s the immediacy of these types of media that makes it possible for the average person to be heard, says Susan Morgan, spokeswoman for Investors Against Genocide, a group that launched its presence online in January 2007.
The group has relied completely on electronic communication to make itself known among shareholders. So far, 10,000 people have signed up for the group’s e-mail list, she says. With little more than its electronic campaign, the organization has submitted more than 50 shareholder proposals, she says.
The low cost of electronic communication, compared to traditional campaigns that rely on newspaper, television or even billboards, helps level the playing field between billion-dollar investors and those with only a few bucks.
“It really doesn’t matter what quantity of shares you own as much as the argument you are putting forward,” says CEO-toppler
The best activist organizers can hope for is that their cause goes “viral,” which means that it develops a cult-like following and spreads rapidly.
For example, last year Darfur activists bought high-priced television time to air a controversial ad in which an advisor consulting with a couple congratulated them on “making a killing in Darfur3.” Although the ad no longer runs on television, it and others, some of which name companies specifically, live on through YouTube4.
Likewise, MySpace members have picked up the
Shops should prepare to experience and respond to more such electronic campaigns, says Jackson, who notes Securities and Exchange Commission chairman Christopher Cox’s support of online shareholder chat rooms.
Last May, at a conference, Cox called for the industry to wield technology as its weapon of mass destruction in the “war against complexity,” and touted the SEC’s own advocacy of eXtensible Business Markup Language (XBRL), or “tagging” of federal filings, as one example.
Beyond just pushing proxies, the Internet has the potential to transform the way investors communicate, Morningstar’s Lutton says. Chat rooms and online communities such as the Vanguard Diehards5, a group of amateurs who offer advice on how to construct Vanguard portfolios, can both educate people and push their own agenda, she notes.
Other topics such as executive compensation are also possible topics for shareholders to rally around. “Information about investments is a lot more accessible now,” she says.