Next Investors logo grey

The risks and rewards of retail shareholder activism

Published 02-FEB-2017 16:42 P.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

HotCopper Holdings Limited (ASX:HOT) Chairman Steve James outlines the risks and rewards of a rise in retail shareholder activism in Australia’s financial markets, speaking with The Capital Network’s Lelde Smits at Australian Securities Exchange (ASX:ASX).

Lelde Smits: Hello I’m Lelde Smits for The Capital Network. Joining me at the Australian Securities Exchange headquarters in Sydney is the Chairman of HotCopper Holdings Limited (ASX:HOT), Steve James. Steve welcome.

Steve James: Thank you Lelde.

Lelde Smits: The power that financial institutions have over listed companies, such as ASX-listed companies, is increasingly being challenged by the rise of the retail investors. Can you explain what you believe is behind that shift and also where the opportunities lie.

Steve James: Sure Lelde. I think we live in an increasingly transparent world. We’ve seen the rise on online broking, we’ve seen the rise of self-directed investors and that is a trend that isn’t going to go away. And, as investors have become more educated and tools like HotCopper and other services empower those investors to have a say, companies are now on notice that they need to be very transparent in their behaviours and in their reporting or it is very likely that they’re going to be held to account.

Lelde Smits: Absolutely. They certainly are on notice. Companies have always known that they need to be vigilant, but now more than ever. There are risks if you fail to communicate and action accordingly. What do you believe those biggest risks are for companies if they do fail to listen to their shareholders?

Steve James: There are very serious legal consequences but there are also very serious secondary considerations perhaps, like shareholder revolt. And, forums and social media of all kinds are now playing a much bigger role in impacts on executives and stock prices.

Lelde Smits: Certainly, so if we look at 2016 it’s been a record year for shareholder activism.

Steve James: Yes.

Lelde Smits: How do see that landscape changing or evolving in the following year?

Steve James: The opportunities lie in companies putting much more work into their investor relations activities and keeping shareholders better informed and working with shareholder groups [such as Australian Shareholders Association and Australian Investors Association] and bodies such as the ASX to increase transparency.

Lelde Smits: Excellent, well I hope all shareholders and listed companies have been listening to that. Thank you for your insights.

Steve James: Thank you Lelde.

The views and opinions expressed in this article are those of Steve James. You should not act on these views or opinions without undertaking your own due diligence as to the voracity and accuracy of his views and opinions. These views and opinions may be wrong or misleading.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.