Have activist shareholders become the enemy of the common shareholder?
It seems like lately they will buy up a lot of shares and agitate for changes that will make a quick buck on the stock - like a cash out or an acquisition - Cramer says, but it isn’t always the right move for the company. The recent speculation that broker TD Ameritrade might merge with E*Trade gives Cramer more fodder for this theory. He thinks CEO Joe Moglia is producing great returns, but he’s still being pressured into merging.
Moglia tells Cramer he recognizes that his responsibility is to deliver results for all his shareholders. He understands that money managers are going to do what they believe is best for their shareholders, but “that’s not going to influence what we’re going to do for ours.”
Moglia says he is obsessive that everyone at Ameritrade – from the top brass to the associates – stays focused first and foremost on executing the company’s business plan.
Individual investors are more sophisticated today than they were before the bubble burst in 2000, Moglia says. Instead of buying stocks when they’re up and selling them when they’re down, Moglia says his clients are now net buyers of the market on a down day and sellers when it’s up significantly.
“That’s a great improvement,” Cramer says.