Home Business News Ask Clem: "Are AGMs ever worth attending? They sound unbelievably dull."

Ask Clem: "Are AGMs ever worth attending? They sound unbelievably dull."

6th Sep 12 8:10 am

Not unless you are on the look-out for a hot widow, says ADVFN.com founder Clem Chambers in his regular slot answering readers questions

I would say there are many reasons to go to an AGM, but none of them good.

The AGM is of course a big deal for a company, it’s the day when its shareholders have a chance to get together and meet the management and vote on issues.

This sounds good on paper and it has its purposes. But the truth is if you feel you have to go to an AGM you shouldn’t own the stock.

What you should do is own 30 stocks, all balanced in reasonable quantities so to spread your risks out. Diversification is the core of sensible investing.

If you have 30 stocks, you can’t go to 30 AGMs.

You may have bought a lot of one stock so that it is now very important to you.

Oh dear, you have bought too much stock then! Don’t go to the AGM, instead sell some shares until the position sits comfortably amongst all your other holdings.

If you felt it necessary to go to an AGM for anything but curiosity then you own the wrong stock or aren’t investing properly.

Let’s look at it another way. If it costs you £50 to get to the AGM and costs you 3 precious hours, say another £50 of your hard won time the AGM will cost you £100 to attend, just to start with.

We might be able to subtract £3 for a cup of dodgy tea and some chocolate biscuits, but let’s just say attendance cost you £100 and all the fun of slogging it up to some faceless bit of the city.

If £100 equates to a cost equivalent to 1% of your holding, it means you have to own £10,000 worth of shares in that company to make it worth your while. It means if you have 30 shares like it, you have a portfolio of £300,000.

Now who wants to spend 1% of the portfolio total worth going to AGMs every year?

So let’s stick the maximum cost at 0.1% of your positions value. Now you need to own £100,000 of the share and you have a portfolio of £3m.

It you had £3 million in your portfolio and the other trimmings to go along with it, are you going to BTs AGM for tea and biscuits?

In short, in this scenario an AGM is not worth your effort.

Of course if you want to go see a media circus attending an AGM of a company mired in scandal or controversy can be fun. If you have troll tendencies you can stand up and make long rambling speeches out of an opportunity to ask questions. You can barrack a fat cat much to their dismay. There is fun to be had for your £100 if you are choosy.

There are opportunities if you are cute too.

Why not turn up to an AGM and sell your wares? As you’ll likely be the only person in the room it will be your chance to pitch a board of directors your talents.

There might be some brokers there too who are hungry for business, so you may hit them up for some tips: “god preserve you,” if you follow any.

If you are truly ruthless and single, you may go hunting for a wealthy widow/widower. If any attend, you can be sure they are lonely and vulnerable, so once you have swapped tales of fat portfolios you can go in for the kill, Ealing Comedy style.

For all these derivative opportunities if you are an investor, forget it. If you need reassurance from the board in person on any stock, sell it right away.

Now some people will be horrified. “You must be an activist shareholder. You need to care about what the company you invest in is doing? You need to be engaged”.

Well you can happily do that by surfing ADVFN or Google for 30 minutes. By then you will have a good handle on what the company is up to.

In the days of steam an AGM might have been necessary; investing by penny post was a risky business, but today you are spoil for information.

Alternately if you don’t believe in holding a balanced portfolio and you are terrified a stock which you filled your boots with, might run aground, then go along to look the board in the eyes is not going to take away that fear.

If you think going to AGM’s is of use, then ask how the huge AGMs of RBS, Lloyds, HBOS etc. worked out for their shareholders when they rode high.

If you think a board has questions to answer, take that as a signal that its time to dump their companies stock.

Clem Chambers is the founder and chief executive of ADVFN.com, which offers stock quotes, charts, news, FOREX, futures & options and stock screeners on more than 70 stock markets worldwide. He is also the author of 101 Ways to Pick Stock Market Winners.

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