Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Retirement Compounders®
  • Free Email Signup

We Three Kingmakers: These Firms Control Almost Everything

July 29, 2021 By E.J. Smith

By Najmi Arif @ Shutterstock.com

Three firms are gathering enough control over the stock market that if they are aligned on a corporate board decision, there’s almost no way to stop them. BlackRock, Vanguard, and State Street now control such a large part of the U.S. stock market, that when voting together they can control nearly any issue. John Rekenthaler explains at Morningstar:

In aggregate, the Big Three of Vanguard, BlackRock, and State Street now hold 43% of the fund industry’s U.S. equity assets. In addition, each of those companies serves institutional clients through separate accounts and collective investment trusts–vehicles that bring them additional shares but which do not appear in fund databases. Index fund managers may speak softly, but they carry a very heavy stick.

Exxon Mobil (XOM) learned that lesson the hard way when an activist hedge fund upturned its apple cart. The hedge fund, creatively named Engine No. 1, appeared to have little chance of influencing giant Exxon Mobil, given that it owned only 0.02% of the company’s stock. But thanks to backing that it received from institutional shareholders, Engine No. 1’s initiative won enough votes to place three dissident candidates on Exxon Mobil’s board.

Chief among those institutions were Vanguard, BlackRock, and State Street. Engine No. 1’s loudest advocates were several state pension funds, which held more Exxon Mobil equity than did Engine No. 1 but nevertheless were minor shareholders. If the endeavor were to succeed, the rhetoric needed to be matched by muscle. Enter the Big Three, which controlled a hefty 21% of Exxon Mobil’s stock. Quietly, they threw their weight behind the dissidents.

Of course, a 21% market share cannot decide matters alone. Vanguard, BlackRock, and State Street do not hold enough Exxon Mobil stock, or that of other companies, to determine an election’s results on their own. However, if the three organizations vote together, as they did with the Exxon Mobil proposal, they can decide close elections. Any proposal that attracts one third support will pass, if its proponents can convince the Big Three to join their forces.

You know this is about the EGO of the company’s CEOs. They want to pursue their version of what’s right, even at the expense of shareholder return. You invest, but they win.

Action Line: Avoid the control exerted by these big fund companies by owning a diversified mix of individual stocks. If you need help, I would love to talk with you.

Originally posted on Your Survival Guy.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • The Real Reason Firms Buyback Stock
  • The Fed Unleashed a Force it Can’t Control
  • Regulators Zoom in on Blank Check Firms (SPACS)
  • Author
  • Recent Posts
E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com

Click here to sign up for my free monthly Survive & Thrive letter.
Latest posts by E.J. Smith (see all)
  • Yes, Your Children Are Listening to You - February 8, 2023
  • You Aren’t Getting These Yields from Your Bank Account - February 7, 2023
  • What Your Survival Guy Invested in Today - February 6, 2023

Search Young Research

Most Popular

  • You Aren't Getting These Yields from Your Bank Account
  • What Your Survival Guy Invested in Today
  • Tom Brady Retires, Again. Should You?
  • Suddenly, Holding Cash Looks Good Again to Many
  • Do You Trust This Rally?
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • The Power of a Compound Interest Table
  • What Happens if the "Fed Put" Is Over for Good?
  • Early Advice from Her Dad on Tipping at Charlie Trotter’s
  • Real Estate "Power Buyers" Suffering Glut of Inventory

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Big Hearted, Idealistic, Daring…
  • Yes, Your Children Are Listening to You
  • BEN CARSON: How Is Biden’s Speech Creating Unity?
  • Biden’s State of the Union Address Receives Rough Reception
  • Can a Capital Injection Save Bed Bath & Beyond?
  • You Aren’t Getting These Yields from Your Bank Account
  • Democrats’ Widening Schism
  • Jimmy Buffett Playing Key West
  • Whatever You Knew, Dave Hammer Knew More
  • Dragon Tours Open for Business

RSS The Latest at Yoursurvivalguy.com

  • Yes, Your Children Are Listening to You
  • You Aren’t Getting These Yields from Your Bank Account
  • Bidenflation Has Eaten Up Americans’ Pandemic Savings
  • Dragon Tours Open for Business
  • What Your Survival Guy Invested in Today
  • You Invest, They Win: FTX Edition
  • Your Retirement Life: Adventure Awaits
  • Zumwalt-Class Guided Missile Destroyers to Get Hypersonic Weapons
  • Early Advice from Her Dad on Tipping at Charlie Trotter’s
  • Treasury Bonds Ready to Rock and Roll

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2023 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.