Inadvertently Pushing Out Long Term Shareholders

Companies in the US have long decried the “short term” orientation by shareholders and analysts, and encouraged long term participation in markets. The tax code attempts to foster this as well, since “short term” gains are taxed at a higher rate than “long term” gains, which are for stocks held longer than 12 months.

While we are not exclusively “buy and hold” investors here at Trust Funds for Kids, we do attempt to hold stocks for the long term, and not sell based on short term market signals. We generally sell stocks that seem to have entered a terminal decline, or whom have benefited from giant share point rises which do not seem sustainable into the future.

Thus I was more than a bit irked by this letter received from my brokerage, which came to them from the issuing company. The company is “offering” me the “opportunity” (in quotes, because this is a bad offer) to liquidate my position, ostensibly because my small odd-lot holdings (less than 100 shares) may cost them more to administer than a typical share holder would.


There are two main things wrong with this offer…
1. Comcast wants to CHARGE ME for the PRIVILEGE of selling these shares. If they really want to get rid of these odd-lot shares, they would PAY ME or at minimum NOT charge me to incent my behavior
2. We are long-term shareholders. Likely odd-lot holders are more likely to “buy and hold” than any other type of investor (I can’t prove that without a lot of research, but it makes sense that the odd lot holders are not buying and selling in rapid fire fashion). Companies are SUPPOSED to like those sorts of share holders

In any case we aren’t selling. We usually buy in units of $750 – $1200 per stock. In order to not be an “odd lot” customer, you’d need to buy 100 shares minimum, which would mean that we couldn’t buy shares that cost more than $7-12 / each. This artificially limits our stock options (none of the 8 selections for 2013 were at $12 or below). As long as they don’t significantly penalize me for buying in odd lots, I will continue to do this for the beneficiaries of my trust funds.

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