This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Maybe I’m going to tell you something here you already know, but it warrants repeating.
I do not think the majority of public company corporate boards, C-suites, investor relations departments, and other related teams generally give a horse’s butt about the retail investor. Aka the average investor aka Main Street aka a person grinding away each day in the hopes of living comfortably in retirement.
Chances are that’s you, reading this Sunday morning, drinking a cup of homemade coffee while wondering if you should add 25 more shares of something priced under $5. Or one share of Nvidia (NVDA).
How can I make such a bold proclamation?
For one, I talk to people in all these groups every single day of my waking life, and have for 21 years. Everyone is so fixated on their compensation plans, perks of the gig, what institutional investors may do, what a competitor is saying on TV, and if an influential sell-side analyst is about to slash estimates and drop a rating.
Other worries include business plans, their execution of them, and nailing the highly publicized succession to an underboss.
I never hear them discuss how their actions may affect the average investor. And I mean never.
Secondarily, just look at how companies speak to the outside world when they are forced to do so. It continues to be some form of morse code that requires a Harvard honors degree to decode.
Take 10 minutes today and try to read the last earnings call transcript for Microsoft (MSFT). Here it is for easy reference. Be honest, do you have any idea what they are talking about, and how it may shape the value of the 10 shares you own? Probably not; I am often lost in the jargon myself.
Good luck trying to comprehend all the abbreviations in the notoriously exhaustive earnings release from Coca-Cola (KO). Here is the company’s last earnings report. How can a company that makes such simple products (water with various sugars and dyes) put out such complicated earnings releases?
I bring all this up in the wake of the Disney (DIS) vs. Nelson Peltz boardroom battle.
Throughout the entire ordeal, we heard Disney CEO Bob Iger fire back at billionaire Peltz. We heard Peltz fire back at the very fit 73-year-old Iger. We saw both parties beg and plead to get the support of institutional investors such as BlackRock and T. Rowe Price.
Neither person spoke directly to retail investors, probably because they thought it was beneath their existence on Earth. Neither one went Elon Musk style and held a webcast to take questions from the average shareholder.
Iger could have done this; they’re a media company and surely have the assets to execute (drop me a line, Bob, we can host these webcasts on Yahoo Finance).
At the end of the day, it was the retail investor that played a large role in the final outcome.
Retail investors represent just under 40% of Disney’s shareholder base. Some 75% of retail investors who cast votes backed Disney’s slate, the Wall Street Journal reported.
If Peltz had spoken directly to this group, maybe he would have a board seat at Disney. If Iger had appealed directly to this group, maybe his win would’ve been even larger — giving him yet another moment to boast about at a movie premiere before he retires maybe in 2026.
So now my message to Iger is this: The average investor who owns your stock because they enjoy Mickey, your movies, and the dividend check has supported you and what you want to do. Show them respect because they are a powerful group. Deliver for them.
Retail trading volume hit a high in 2023. Between 2019 and 2022, direct stock ownership increased to 21% from 15%, according to Federal Reserve data, the largest change on record.
Meanwhile, the World Economic Forum estimates that retail investors will account for 61% of global assets under management by 2030. That number stood at 52% in 2021.
Retail investors are a force to be reckoned with, Interactive Brokers chief strategist Steve Sosnick told me.
“They certainly follow the action and are attracted to the big names and oddball situations that crop up,” said Sosnick.
He is right.
And Bob, you can’t get complacent either or this group will turn — and likely influence larger investors more than this latest go around. Execute, or else.
“The pressure on Bob Iger [until he retires in 2026] will stay really right,” Needham analyst Laura Martin said on Yahoo Finance Live. “Activists are circling this company and they’re only kept at bay if the share price keeps going up.”
Disney declined to make Bob Iger available to Yahoo Finance for an interview.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
Click here for in-depth analysis of the latest stock market news and events moving stock prices.
Read the latest financial and business news from Yahoo Finance
