I wanted to show a few examples with pictures to illustrate how inexpensive it can be to buy 100 votes
I am going to show pictures of each ticker with me going long 100 shares, short a call, and long a put. The call and put will be for the same strike and the same expiration. At the very end will be a summary table of upfront costs, losses/gains, and then some additional comments.
Please note:
- This assumes no early exercise, which is a risk to this.
- This assumes what is displayed on the ticket can be filled. Technically, it will not fill as optimally, but the gist of this is the key.
- This is all based on data from thinkorswim pulled around 11:30am on 3/30/2023.
Examples
TLDR Summary
- GME: for $2.4k, you can buy 100 votes and you’ll lose is $88
- Robinhood: for $1.1k, you can buy 100 votes and you’ll gain $13
- AMC: for $0.7k, you can buy 100 votes and you’ll lose $138
- Apple: for $16.8k, you can buy 100 votes and you’ll gain $194
- Microsoft: for $27.4k, you can buy 100 votes and you’ll gain $141
For 5 different tickers, this shows how you can shed some or all of your economic risk and have full voting rights. This is empty voting!
You must log in or register to comment.
Fucking incredible and infuriating.
There’s a portion in marketliteracy.org that talks about some of this (roughly). Corporate voting and all the related machinations around that are truly a complete and total sham.
You just figured out what a hedge is. Options transfer risk (but not ownership). It’s not free. You’ve sold your upside with the call, plus “it will not fill as optimally” means that you lose money in transaction costs.
Your 100 votes doesn’t mean anything. There is not enough open interest (in options) to be meaningful, plus it would move the market strongly against you. And, you know, the SEC would need to know what you’re doing once you have 5% of the shares.
You are not understanding the import here.
This excerpt puts it well, “…Thomas Montrone, chief executive officer of Cranford, New Jersey–based Registrar & Transfer Co., which oversees shareholder elections. ‘It is an abomination,’ Montrone, 58, says. ‘A lot of the time we have no idea who’s entitled to vote and who isn’t. It’s nothing short of criminal.’”
Some related reading here, as well.
Are you saying voting rights don’t matter?
This is showing how easy it is to get into empty voting positions.
I’m saying you are paying for those voting rights
- Your risk isn’t limited forever, just for the duration of the options.
- You pay for this protection through the cost of the options, including transaction costs. You ignored them but they are substantial on options.
Of course you’re paying for those votes. In addition, yes it’s true the options expire. 0.65 cents is substantial for options?
The purpose of this is to show what empty voting is and how one could enter it easily.
You’re saying that regardless of the duration, it’s acceptable to buy votes.
I disagree - whole heartedly. That runs counter to the basic principles of voting itself, as well as democracy.
That runs counter to the basic principles of voting itself, as well as democracy.
Lol, tf? Of course you can buy votes at the stock exchange. It’s one share / one vote, not one person /one vote. That’s what a stock is: voting rights and dividend rights.
Is this some community for people who barely understand investing? You guys should have sold GME at the high. All those people yelling HODL or whatever already got out and left you holding the bag.
One share, one vote is not something that is always true. That’s a major part of the issue.
That’s not what we’re talking about here. Your insults speak volumes about either your intentions or your supposed superior knowledge. Surely you’re better than that, no?
Primary research on the topic speaks to the issue: https://ccl.yale.edu/sites/default/files/files/PM-6-Bus-Law-Hu-Black.pdf
This decoupling – which we call “the new vote buying” – is often hidden from public view and is largely untouched by current regulation. Hedge funds have been especially creative in decoupling voting rights from economic ownership. Sometimes they hold more votes than economic ownership: a pattern we call “empty voting.” Sometimes they hold more economic ownership than votes, though often with de facto ability to acquire the votes if needed – a situation we call “hidden ownership” because the economic ownership is often not disclosed. Insiders also often use empty voting techniques.
Please see https://ibb.co/mzyfJbB to understand some more of the nuance here.
deleted by creator
Please ask questions if you have any. Was hoping and surprised you didn’t reply/comment more considering the obvious (and common) confusion/misunderstanding/lack of education.
Thank you for this! Great content. Kudos Ape