ShareSoc is an organisation that promotes the interests of private investors. You might ask why it is needed given that institutional investors are the ones who dominate the stock market. Alternatively, you may observe that private investors are fully serviced by their stockbrokers (or investment “platforms” as some like to call themselves now).
Unfortunately the interests of stockbrokers are different to those of investors. For example, they make their money from transaction charges. So more transactions, or more churning of investment portfolios, is in their interests – but not yours. Likewise the promotion of the use of nominee accounts is in the commercial interests of stockbrokers because it helps with client retention and enables them to gain interest on your cash holdings (not many brokers pay any interest on clients cash these days so they retain the interest available even though that is not as high as it used to be with current low interest rates).
What education do stockbrokers provide to their clients? Well they might provide share tips but the general education they provide in terms of how to analyse sectors, companies and their financial profiles is sorely lacking. Indeed a lot of stockbrokers will encourage you to buy funds rather than invest directly because they make more money that way even though fund charges will often erode a high proportion of your returns!
So there is a sore need for the kind of investment education which ShareSoc provides – not just in their regular “Masterclasses” but by running company seminars where investors can learn from other members what questions to ask of company management, and learn more about companies than they could simply from looking at the financial numbers. One of the simple tools ShareSoc provides is an “AIM Scorecard” which enables you to rate companies and avoid investing in those that are likely to be risky – for example in all those dubious Chinese or other foreign companies that have listed on AIM in recent years, and sometimes then rapidly delisted.
ShareSoc also acts as a “trade union” for investors. It takes up campaigns on problem companies and on Government regulations and taxation – for example ShareSoc has put a lot of effort in the last couple of years into a campaign on “shareholder rights” to tackle the nominee account issue and ensure that all investors can vote at General Meetings and get information from companies in which they are invested. Incidentally nominee accounts are positively dangerous for retail investors but will your stockbroker tell you that? “No” is the simple answer.
ShareSoc thinks that investors should behave like owners of the companies in which they invest, rather than simple speculators in share price derivatives. Shareholder democracy is important if you want the businesses you invest in to make money for you.
When companies get into difficulties or shareholders are at risk of substantial losses it can help for ShareSoc to get involved. One cannot always rely on institutional investors to do all the work. In smaller companies such as AIM stocks there are often more private investors than institutions and the latter tend to frequently want to forget about it and move on. Now, of course private investors can dump problem stocks but that it is not always easy. The shares might be suspended or delisted. Or there may be big capital gains bills to pay if you sell (for example, in investment trusts that have been held for a long time, or VCTs where roll-over relief was claimed years ago). So for those reasons ShareSoc has run campaigns such as those on Alliance Trust and Oxford Technology VCT3 which have both resulted in substantial changes to the way those trusts were managed. In other cases investors are reluctant to sell stocks when they see that the share price undervalues the potential of the business. Alliance was a case where ShareSoc worked with an institutional investor to maximise the impact of their work and where the large number of private investors in a company would likely decide the outcome, as was in fact the case. If a few management or strategy changes in a company would solve the problem, why not campaign for that instead rather than dumping the stock? ShareSoc therefore supports shareholder activism where it seems appropriate.
When companies get into difficulties, sometimes investors just want some advice which again ShareSoc can provide as one of the few independent bodies that can give general advice (not of course individual investment advice – they won’t tell you what to buy or sell).
ShareSoc is a one member, one vote company incorporated as a company “limited by guarantee” with not-for-profit articles. One of the strengths of being a member based organisation is that it is easy for members to talk to each other and learn from others. ShareSoc provides networking opportunities both at physical meetings and via on-line services.
In conclusion, therefore, ShareSoc provides many benefits to private investors and keeps investors informed on topical issues. There are very few investors that would not benefit from being a member. Go to www.sharesoc.org for more information.
Roger is currently Deputy Chairman of ShareSoc (the UK Individual Shareholders Society”) which promotes the interests of private investors. He has been an active stock market investor for many years; written numerous articles on stock market investment for a wide variety of publications; and has been actively involved in a large number of campaigns on “problem” companies. His previous career was mainly as a director of IT companies and he has done some “business angel” investments in early stage companies. He is a Member of the British Computer Society, has a Masters Degree in Business Administration and a first class degree in Engineering.