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> I always thought this was simply shorthand for something like: "I own shares #1034852, #1092647, and #2986246". Nope, (private) shares are almost always fung
by MacsHeadroom 3y ago
> I always thought this was simply shorthand for something like: "I own shares #1034852, #1092647, and #2986246".
Nope, (private) shares are almost always fungible and not numbered/serialized in any way.
In fact most shares are just a name followed by a number of shares in an excel spreadsheet or Google sheet at best, if not simply a declaration in founding documents.
> People sometimes own 0.25 shares of a company, but I thought that this was a convenience invented by stock brokers like Fidelity and Robinhood.
Again, no. Fractional shares are very normal. Any time shares are created (via dilution, additional investment, etc.) some existing grants and holdings are likely to become fractional. Usually fractional shares are calculated to the third or fourth decimal place.
Many shareholders in the forementioned spreadsheet will have their share amount tied to a % calculation which will inevitably resolve to a fractional share amount.
Say a share is worth $500, are you okay with $500 rounding errors? I wouldn't be. With 4 decimals the maximum rounding error becomes an immaterial 5 cents.
- deleted 3y ago[deleted]
- crazygringo 3y agoSure for private shares. But what about public shares, which is what people are usually discussing? Do publicly traded shares not have serial numbers or identification numbers or something to that effect?
- koolba 3y ago> Do publicly traded shares not have serial numbers or identification numbers or something to that effect? No they’re fungible. The vast majority are held as book entries in the DTCC[1]. Even if you pull them out of that system, they still don’t have an individual identification number like a bond’s serial number. [1]: https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_...
- tomatocracy 3y ago> like a bond's serial number Bonds are also typically fungible in the same way these days (including typically being held by a clearing house if they are traded).
- tzs 3y agoBeing fungible does not imply that something does not have a serial number or identification number. For example US dollar bills are fungible but they have serial numbers.
- bombcar 3y agoThey used to when they were actual physical share certificates. But they were all tracked in brokerages anyway and that’s been mostly done away with (you can still buy physical share certificates in some cases, and some people collect old invalidated ones).
- EE84M3i 3y ago> Usually fractional shares are calculated to the third or fourth decimal place. Does this mean that it's possible that the total number of shares people own doesn't add up exactly to the number issued?
- cornfutes 3y agoYou’re conflating floating point numbers with decimals.
- EE84M3i 3y agoI m win it shares.are rounded to four places during a dilution event, what happens to the cumulative rounding error?
- fsckboy 3y agorounding is performed such that all the pieces add to 100% so somebody gets the piece that in your mind is in question. I don't know where the piece goes or i would tell you, but it's not lost