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The overlap of owners means nothing, as those are mutual funds or ETFs that are the top owners of most stocks on the market.
by chrisbolt 8y ago
The overlap of owners means nothing, as those are mutual funds or ETFs that are the top owners of most stocks on the market.
- sjjshvuiajhz 8y agoIt seems relevant - if company leadership is attempting to act in the best interests of the shareholders, the fact that the shareholders also own their competitors would tend to bias them against engaging in a price war (even one that they would have a good shot at winning).
- prickledpear 8y agoThese mutual funds and ETFs actively participate in corporate governance, and the overlapping ownership of most stocks in the market is a very underrated problem. Economists have found evidence that as ownership concentration increases, firms act more like a monopoly. See this paper for one example in the airline industry: https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12698 https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12698
- nebolo 8y agoParticipating in corporate governance and actively forming corporate strategy is a very different issue. And to my knowledge, ETFs and mutual funds do not participate in any meaningful way in management, i.e. they do not act as activist investors.
- jasode 8y ago>And to my knowledge, ETFs and mutual funds do not participate in any meaningful way in management, i.e. they do not act as activist investors. There's been a trend towards more activism with passive indexes. One example with Blackrock's passive fund: https://www.afr.com/business/larry-fink-says-blackrock-will-take-activism-to-a-whole-new-level-20171031-gzc2lt https://www.afr.com/business/larry-fink-says-blackrock-will-...
- currymj 8y agothere’s an ongoing debate about whether this situation actually does pose an antitrust problem across many industries. it’s at least not totally implausible.