Mutual Fund Shareholders Reject Divestment Proposals

Divestment is a false choice. Someone else will by the shares. This was tried in South Africa during apartheid and proved ineffective. The best way to influence management is through shareholder actions.

If a mutual fund owns millions of shares of PetroChina, Putnam, American Funds and other large shareholding mutual funds CAN apply pressure to PetroChina to clean up their act. Better still, if they did it in concert, perhaps representing a huge or majority stake in PetroChina shares, I rather doubt that PetroChina management could long ignore the rumblings. Wouldn't this be a more effective way of sending a message to PetroChina than "I'm selling my toys to the highest bidder and going home"? Why should PetroChina management care if a person who owns 1/10,000 of their company doesn't want to own it anymore? Why would they even listen to such a voice?

The real question or problem is why mutual fund managers remain gutless and unwilling to use their stake and influence to confront or change management of companies like PetroChina. Why is it OK for mutual fund managers to standby in silent acquiescence in all situations at all times? The voices of the actual investors, mutual fund owners, are being needlessly squelched by mutual fund managers who inappropriately interpret legal consent as ethical consent. Why can't Putnam, American Funds and others ask their shareholders what they should do, tell or pressure PetroChina's managment to do? Wouldn't that be more interesting and effective?

Steve Bard of NY 11:34AM December 13, 2009