Mark Zuckerberg’s Facebook Class C Stock Lawsuit

Mark Zuckerberg wants Facebook to create a Class C of stock (a third class class in the capitalization structure) with non-voting rights so that he can sell billions of dollars worth of FB stock in the coming years so that he can maintain the 60% voting power in Facebook that will effectively allow him to personally keep control of Facebook even while gradually draining his equity investment in the social media corporation.

Facebook shareholders Eric McGinty and Eric Levy separately launched class action lawsuits two days after the April 27th Class C stock announcement alleging that Zuckerberg and the Facebook Board of Directors violated their fiduciary duty of loyalty to the shareholders by engaging in a conflict of interest transaction that gives Zuckerberg the benefit of entrenchment without giving the adversely affected voting rights of the remaining shareholders the benefit of a bargain. The reason why it is a class action lawsuit instead of a derivative claim is because derivative claims apply to injuries against the corporation and class actions apply when it is a minority of shareholders within the corporation that are adversely affected.

Continue Reading!

The $3.5 Billion Baker Hughes-Halliburton Termination Fee

Termination fees, in the event a planned merger or acquisition fails to consummate, is a fascinating topic that’s long been heavily litigated in Delaware courts where 52% of publicly held corporations are incorporated. Sometimes they are used to offset the time and resources involved in negotiations, and even add credibility to merger offers, and other times, they are used by corporations that put themselves up for sale to lure in an initial acquirer if it looks like an auction involving other bidders will soon follow.

Continue Reading!

BP Stock Dividends Since 2013

I covered BP stock publicly for the first in March 2013 when the price of the gigantic oil corporation was $40.33. The article was titled “The Role of BP’s Dividend In Preserving Your Wealth Over The Medium Term.”

My thesis statement was this: “One of my favorite things to do when researching investments is to conduct studies on realistic worst-case scenarios for blue-chip stocks. Almost every time, the result I have found has been this: if the dividend remains reasonably intact and the underlying business maintains solvency, the total returns for seemingly dreadful stocks is never quite as bad as you might think by looking at a stock chart alone.”

Continue Reading!

The Decline Of A Buy-And-Hold Stock

Dig through a 1990s edition of Kiplinger’s Magazine, and you will find many lists of long-term investment suggestions that include Mattel (MAT). This is understandable. The net profits on each toy sold during this period was over 10%, and the best long-term performance range during this era came between 1982 and 1996 when the stock returned 16% annually.

If you could hop into the wayback machine, it’s easy to see why Mattel would earn a spot on the list of buy-and-hold investments when you were considering the question in, say, 1993. Barbie dolls, the signature Mattel product, used to earn over 30% net profits. Back then, it cost the United States Treasury 4.5 cents to coin a nickel, and you could be technically correct in arguing that ownership of the Barbie franchise was a better license to print money than that of the U.S. Treasury.

Continue Reading!