microcaptrader's  Instablog

microcaptrader
Send Message
  • Lessons Learned the Hard Way #1 0 comments
    Apr 19, 2010 5:36 AM

    Beware of companies where insiders/management control greater than 50% of voting stock. Shareholders in this situation are nothing more than minority partners with zero power to influence insiders/management decisions. Unless your interests align exactly with those of insiders/management, you’re likely to get screwed. 

    I learned this lesson the hard way over a decade ago when a microcap company I had invested a considerable amount of money in was "taken under" by the family controlling over 50% of the voting shares.  The "family" made a ridiculous tender offer for the company at a price well below tangible book value, and then of course voted to accept the offer.  As minority shareholders, our only recourse was to take them to court, which we did, and won.  But why get involved in such nonsense in the first place?

     

Back To microcaptrader's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • Looking for a bottom in KTCC. Low PE. Priced less than tangible book. Mr. Market's dead wrong on this one.
    Feb 3, 2011
  • I'm astonished by how many people confuse complex supply/demand driven price changes with inflation.
    Dec 14, 2010
  • With Oil approaching $90/bbl and the Gulf spill rapidly becoming a distant memory, what's left to hold BP down?
    Dec 13, 2010
More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.