How long do typical incumbent shareholders keep their shares ?

5 Mar

Wall Street

Not long, that’s how long.

Stefan Stanislawski writes a really interesting blog post over at Fibernomics.com entitled Typical major telco shareholders hold the stock less than a year – is this really the right type of capital to fund fibre?

Stefan details the average duration of investors holding on free float shares for major European incumbents. On average, it’s less than a year. Stefan argues that as policy makers seem convinced still that incumbents are the solution to get fiber deployed, that reality itself might make it impossible. Such short term dealings are not aligned with the requirements of infrastructure investment.

Very interesting read.

 

Photo Credit: Wall Street by jpellgen

  • Robert Kenny

    Interesting, but I think the numbers are not quite as stark as Stefan suggests. The mean KPN shareholder may stick around for two months, but that doesn’t tell us that much in a world of high frequency trading (HFT), where a very small number of shares may trade very frequently, with holding times measured in seconds.

    This of course pulls the average holding time way down, but doesn’t tell us much about the typical shareholder.

    For instance, as a thought experiment imagine that 99.99% of KPN shares were held in perpetuity by long term investors. If the remaining 0.01% of shares were traded 5.5 times per hour (a low assumption relative to those holding times measured in seconds for HFT), you would get to the KPN trading volumes Stefan reports.

    In practice, the company is run for the (hypothetical) 99.99%. Likely the company won’t even notice who the HFT traders are – they show up on the share register so briefly. And those computers don’t come in to visit management, don’t vote at shareholder meetings and don’t attend investor conferences. For all intents and purposes, they are invisible to management.