The big cheese. The big kahuna. The head honcho.
There are 40 million common shares outstanding. And the biggest holder (by number of shares, not by measure of any, um, physical feature) owns 12 million of them. That’s not a majority. It’s just a big number.
So can that 12 million holder control the company? Does she? Well, likely yes, even though it’s not a majority. Why? Well, in most companies only a fraction of all the total shares even bother to vote. Kind of like our political system, sadly. So if only a third vote...well, a third of 40 million is 12-ish million, and you’re done already. Say it’s a third of the remaining 28 million shares, or about 9 million actually vote. Well, again the 12 million holder controls. And remember that it’s likely that a lot of those other shareholders will side with whoever the principal shareholder is, presuming that they’re relatively smart, had a lot to do with the company’s success, and will care a lot about the economics of the company going forward.
So owning even a fifth or less of a company can mean control—that’s the principal shareholder, the one who controls. And remember that it’s the common shareholders who elect the board, who hires the CEO, who basically hires everyone else. So it all rolls down the line with the head end at the Principal.
Related or Semi-related Video
Finance: What is Principal Trade?0 Views
Finance Allah Shmoop What is ah principal trade All right
People think the broker as money manager or invest or
for their own account rather than just commission taker That
is a principle trade happens when the principal in the
trade by cell shorts leverage longs and well any other
kind of investment exposures such that they make or lose
money for their own account using their own money I'ii
they are the principles in that trade Well the extra
spiff to the brokerage in making trading happen on their
own is that the scum sucking leeches they normally be
paying commissions to on those trades are in fact yes
themselves I either just trading for themselves and yeah thumbs
up there pal Well when making this kind of trade
brokers must report it I make it known to their
trading partners or whoever they're trading with and then file
paperwork behind it The thinking being that a brokerage should
presumably have a lot more knowledge than the average schmo
Yeah this guy when they're making these trades and they
have to be highly disc close it tive that they're
actually buying or selling a given stock for their own
account when maybe they've got some stockbroker who's doing the
opposite for some unwitting client The SEC wants to know
about it If there's any you no funny business going 00:01:22.14 --> [endTime] on they're there to protect the little guy
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