James McRitchie

James McRitchie
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  • What Does The Flight Of Capital From Active To Passive Management Mean For The Future Of Corporate Governance And Market Volatility?  [View article]
    Active managers are more likely to sell, rather than fight, when they perceive poor quality management or corporate governance. So called "passive" managers (more accurately, index funds), can't flee so must stand and fight... so pay more attention to proxy voting. However, they don't want to alienate corporate managers who choose which funds will handle corporate retirement plans, to they certainly don't want to appear radical. Additionally, they compete with other funds on the basis of being low-cost, so they won't initiate activism (other than to make off the record suggestions to activists).

    Recent research by Dyck, I. J. Alexander and Lins, Karl V. and Roth, Lukas and Wagner, Hannes F., Do Institutional Investors Drive Corporate Social Responsibility? International Evidence, suggests that institutional investors, in aggregate, use their ownership stakes to promote good CSR practices around the world. I would think more especially true of indexed funds.
    Jan 27, 2016. 08:37 PM | Likes Like |Link to Comment
  • Corporate Governance At UPS - Part 1, Who Is Washing The Dirty Laundry In Public?  [View article]
    Thanks for a great post. However, I must object to one assertion "Two of its shareholders went on a campaign to publicly irritate and antagonize the board of directors, demanding the company to change a few of its disputable practices."

    I know both of the shareholders; neither is out to "publicly irritate and antagonize the board of directors." Nothing could be further from the truth. Both would much prefer to have boards simply adopt their proposals, rather than putting them out for a vote. Unfortunately, it often takes many years of effort before boards will even seriously consider reasonable proposals. Both of these shareholders have shown that persistence pays off.
    Dec 28, 2015. 01:41 PM | 3 Likes Like |Link to Comment
  • Whole Foods Market: Add-Ons Easily Followed By Competitors Won't Solve Its Problems  [View article]
    I'd like to see them adopt a hub and spoke model; 7-11 type convenience for organic items you need at least once a week in the neighborhoods, bulk and more variety in centrally located stores. Push those margins
    Dec 27, 2015. 02:04 PM | 2 Likes Like |Link to Comment
  • Grocery shakeup as organic goes mainstream  [View news story]
    Wouldn't it be nice to go into a store and feel confident that everything they sell is reasonably heathy and that most products are organic or are high in organic ingredients. Who wants to spend so much time reading labels or playing buyer beware. There will always be at least a niche market for people willing to pay the price to ensure only wholesome food enters their bodies.
    Dec 18, 2015. 09:43 AM | 8 Likes Like |Link to Comment
  • My Favorite Stock If I Could Only Own One For The Next Five Years  [View article]
    A 5.2% note isn't that great, especially for share buybacks.

    "Whole Foods only has 431 stores and could easily double this foot print, especially with its 365 concept, over the next ten years." But they appear to be spending the money on share buybacks, not expansion.

    Long-term incentive awards at WFM are not only discretionary but consist entirely of equity awards (stock options and restricted stock) that vest simply over time without performance-contingent criteria. On top of that, NEOs (other than Mr. Mackey) received special stock option and restricted stock grants during fiscal 2014, outside of the plan’s typical purview.

    Buybacks are lining the pockets of NEOs (other than Mackey). Bond money would be much better spend expanding stores under the 365 concept. I'd like to see them use a hub and spoke model, similar to airlines. I'd have lots of neighborhood 365 stores, stocking everyday items, and a few centrally located Whole Foods stores for once a week or once a month shopping.
    Dec 9, 2015. 04:36 PM | Likes Like |Link to Comment
  • Important Takeaways From Reading International's 2015 Annual Meeting  [View article]
    Wouldn't it be great to have an analysis of each company's annual meeting by Mr. Shapiro?
    Dec 7, 2015. 09:25 AM | 1 Like Like |Link to Comment
  • Reeds: Slow Quarter Reveals Premium Valuation  [View article]
    Here's the key: the CEO has historically tried to do everything himself without outside help. Look at the board.

    As I wrote near the bottom of today's guest post:
    This year, Reed’s shareholders will not only get to vote on each director (and I will once again recommend against those holding no shares in our company) but we will also get to vote on my proposal to require a majority vote to elect directors. Let’s hope shareholder recognize that greed works. Directors who own a substantial amount of shares, especially purchased with their own funds, care more and work more effectively.
    Dec 2, 2015. 05:29 PM | Likes Like |Link to Comment
  • Tesla's Apple Problem  [View article]
    I doubt if Apple will build a car factory. They don't have a phone factory and that seems to be working out.
    Sep 22, 2015. 11:11 AM | 2 Likes Like |Link to Comment
  • Apple: There Won't Be An iPhone 6s Bump  [View article]
    Interesting analysis. Still, if you have an iPhone 5s and you waited for your contract to expire, you are more likely to get an iPhone 6s. Maybe a small bump... but still a bump.
    Aug 3, 2015. 03:05 PM | 19 Likes Like |Link to Comment
  • Reed's: A 6 Point Inspection  [View article]
    I guess I could have gotten one too, but I'd rather leave my money in the stock and push for it to grow further. Would do even better with a more involved board.
    Jun 1, 2015. 05:52 PM | Likes Like |Link to Comment
  • Reed's: A 6 Point Inspection  [View article]
    Happy to work with shareowners of Reed's to create positive change. With the majority of shares being voted against a director last year, it is hard to imagine Chris Reed can keep ignoring the obvious. You don't need to be Carl Icahn or Nelson Peltz to make a difference.
    May 29, 2015. 07:16 PM | Likes Like |Link to Comment
  • Reed's: A 6 Point Inspection  [View article]
    As you note, Reed's has much going for it re natural product line, growth, founder stake in company. Where it has really fallen down over the years is in its corporate governance. Directors who hold no stock and who are paid a pittance for attending board meetings are signs that 'independent' directors aren't really independent... nor are they likely to be adding real value to the company.

    I think Chris Reed shows signs of genius in many areas but even genius CEOs benefit from an independent board with diverse motivated directors. While it is often a positive when insiders own a third of the company, it can be a barrier to change if they don't see the need. I advised shareholders to withhold votes from the directors that don't own any shares and a majority of shares were actually voted at the last annual meeting against one of the directors. That's a HUGE feat, when you consider that insiders hold 33% and cast them in favor of the director who remains on the board.

    Unfortunately, Reed's operates under plurality voting standards, so if no one is running against a director, they can get reelected with the vote of one share... even if ALL other shares are voted against them.

    I'm still hanging in there, hoping Reed will see the light and agree to some basic corporate governance reforms, like majority voting for directors and proxy access. However, there is a risk that he never will. He may be satisfied with what appears to be a rubber-stamp board.

    Steve Jobs did much better at Apple after being thrown out and returning. Will it take something that drastic for Reed's?
    May 29, 2015. 05:39 PM | 3 Likes Like |Link to Comment
  • An Apple Ultra HD TV Could Be A Better Growth Driver Than Smartwatches  [View article]
    The money is in the software and agreements with providers, not in the screens. The markup on screens is very low, so a better box is the way to go.
    May 21, 2015. 12:53 PM | 18 Likes Like |Link to Comment
  • Does Gilead Have The Cure For Apple-Itis?  [View article]
    Seems more about you than Gilead. For example, you mention "promising areas like HIV treatment and cancer research" but say nothing further about them. Seems a little faith-based going forward.
    Apr 2, 2015. 01:11 PM | 5 Likes Like |Link to Comment
  • Reeds reports FY'14 results  [View news story]
    I see three of the directors at Reeds own very little stock in our company (two own no stock). That seems like a very bad sign.
    Mar 26, 2015. 05:20 PM | 2 Likes Like |Link to Comment