5 ms·

Time has come for Zynga to sell the farmville

40 points by e15ctr0n 11y ago

chollida1 11y ago
> Pincus owns a few of the A shares, which confer one vote to their third-class owners. He also owns 63 percent of the B shares, which come with seven votes apiece; and 100 percent of the C shares, each of which gets 70 votes. All told, for a 10 percent economic interest in Zynga, Pincus wields 64.4 percent of the ballot. There are more than a few analysts, I'm intentionally using some weasel wording here as they've asked that I not make their names public, who think that Zynga could be the firm that brings dual class share structures to court. The thing that could make Zynga interesting is that normally when a minority share holder gets screwed, or thinks that they are getting screwed, they are an individual who doesn't have alot of options. In this case there are alot of hedge funds, the stock has become a hedge fund hotel, who bought into Zynga because their cash on hand and building liquidation makes them a prime take over target and hence a must own stock for funds doing pre-arb. It's not going to take a very large mis-step or perceived mis-step by the CEO and board for these funds to get litigious. I am in no way a legal expert so I'll make it clear that this is hearsay, but I've been told that if they get to court then this could be a case that helps shape the role of dual class share structure in public companies. I guess most people won't be familiar with the term Hedge fund hotel.... http://www.zerohedge.com/news/presenting-latest-hedge-fund-hotel-these-are-most-beloved-stocks-hedge-funds-september-30 http://www.zerohedge.com/news/presenting-latest-hedge-fund-h...
- cenal 11y ago
  As a founder I hope that should this go to court that Pincus prevails. These funds invested knowing about the risks and the rules. They should be forced to honor that agreement. Even if Pincus isn't doing a great job he's not unethical for raising money on his terms. All founders should hope to be in his position when they go to raise.
  - rahimnathwani 11y ago
    "All founders should hope to be in his position when they go to raise." Yes, and all shareholders should hope that such founders use there voting power to maximise long term shareholder value. I guess that the parent comment is suggesting this isn't always the case.
  - pstuart 11y ago
    He did prevail. He's worth a billion dollars.
- rahimnathwani 11y ago
  "Zynga could be the firm that brings dual class share structures to court" On what grounds? As I understand it, the shareholders vote for the directors, and the directors pick the CEO and set his/her pay. Do these people believe have done this job in a way that favours Pincus' interests, at the expense of the economic interests of all shareholders?

40 points by e15ctr0n 11y ago

> Pincus owns a few of the A shares, which confer one vote to their third-class owners. He also owns 63 percent of the B shares, which come with seven votes apiece; and 100 percent of the C shares, each of which gets 70 votes. All told, for a 10 percent economic interest in Zynga, Pincus wields 64.4 percent of the ballot. There are more than a few analysts, I'm intentionally using some weasel wording here as they've asked that I not make their names public, who think that Zynga could be the firm that brings dual class share structures to court. The thing that could make Zynga interesting is that normally when a minority share holder gets screwed, or thinks that they are getting screwed, they are an individual who doesn't have alot of options. In this case there are alot of hedge funds, the stock has become a hedge fund hotel, who bought into Zynga because their cash on hand and building liquidation makes them a prime take over target and hence a must own stock for funds doing pre-arb. It's not going to take a very large mis-step or perceived mis-step by the CEO and board for these funds to get litigious. I am in no way a legal expert so I'll make it clear that this is hearsay, but I've been told that if they get to court then this could be a case that helps shape the role of dual class share structure in public companies. I guess most people won't be familiar with the term Hedge fund hotel.... http://www.zerohedge.com/news/presenting-latest-hedge-fund-hotel-these-are-most-beloved-stocks-hedge-funds-september-30 http://www.zerohedge.com/news/presenting-latest-hedge-fund-h...

cenal 11y ago
As a founder I hope that should this go to court that Pincus prevails. These funds invested knowing about the risks and the rules. They should be forced to honor that agreement. Even if Pincus isn't doing a great job he's not unethical for raising money on his terms. All founders should hope to be in his position when they go to raise.
- rahimnathwani 11y ago
  "All founders should hope to be in his position when they go to raise." Yes, and all shareholders should hope that such founders use there voting power to maximise long term shareholder value. I guess that the parent comment is suggesting this isn't always the case.
- pstuart 11y ago
  He did prevail. He's worth a billion dollars.
rahimnathwani 11y ago
"Zynga could be the firm that brings dual class share structures to court" On what grounds? As I understand it, the shareholders vote for the directors, and the directors pick the CEO and set his/her pay. Do these people believe have done this job in a way that favours Pincus' interests, at the expense of the economic interests of all shareholders?