The Insanity of the Proxy Season for a Short Term Trader

• Posted by Greg Harmon
• on April 22nd, 2011

It is Annual Meeting season and with that comes the never ending flood of proxy statements. Each with its 4 to 10 items to express your view for the future benefit of the company. Over the past few years, with little focus on long term investing, this process has become a real nuisance for me a as swing/position trader. Maybe I should just throw them all away and be on with it. After all I only have macro insights to most of these votes. Citigroup (ticker $C) is one I have opinions on but how do I know if current management at Timken is doing a great job? Could they be doing more? To me it is $TKR and a picture of price action in a broadening wedge after a strong move higher.

So I start to search for stories and fundamentals for a few minutes before I stop and realize this more than I did before buying the stock a few weeks. Now have no money there. But what got me to the point of writing about it was a trade on Dorman Products (ticker:$DORM) I entered on March 24th.

Note on the chart above that I entered the trade on March 24 and was stopped out on the next day March 25. As it turns out I wrote a trade recommendation for a short sale shortly thereafter. What I did not realize until Monday April 18th when I opened the mail was that I held the stock over record date. I held this stock for less than 24 hours and I have a say on executive compensation and who sits on the Board of Directors. This is insane! I know that there are investors that are passionate about this process. And there are day traders that avoid it by being flat every night. But shouldn’t there be some kind of conditions before you can vote at the annual meeting? I am all for the democratic process, but this does not accomplish that. People like me that throw the proxy card away, end up getting lumped with management and possibly against the views of major shareholders. This is not democratic, this is playing into uncontrolled management. Vote down every proposal? That is not necessarily productive either. So there it is, the system is broken. I do not have a solution to fix it at this point do you? If so I would love you to share it.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus