What institutional investors want and how #fanownership could give them it Football Investment PART 2

A post in Which i show an approach engaging the Institutional investors that gets the Fans Control

I hope I established some ground rules in Part 1 regarding the following Facts.

• not all institutional investors are the same
• Rangers is a really quite a small business
• the money involved from these investors is minuscule in the grand scheme of things
• they are in it for money
• there are basically 4 ways to make money, Share value Growth, Dividend payment, related company Trading, PR gains for separate companies owned by same shareholders 
• there is always the "just fancy it factor"

So with the above in mind how does Fanownership fit into all this?

IMHO the institutional investors involved are there for the first two ways of making money from there shareholding.

The do not need to make money from owning the pie selling company or getting good PR (because right now they are not)

So for a Fanowned CIC to get hold of any shares it has go to scratch these guys where they itch.

Now bear with me this is where it gets a bit complex hopefully my limited writing skills will communicate this well enough but apologies in advance if I edit again later for clarity

1. Share value

Now each investor will have bought their shares at a set value. There are two ways to then get these shares. The first is to offer more money than they paid for them, the second is for the shares to be so obviously on the way to very little value that they cut losses and sell to exit there position.

This is where you have to bear in mind just how little money these guys have spent in the grand scheme of things becomes important.

2. Dividend payment

The only way that shareholder would under normal circumstances get a dividend payment is for the board to approve one and then it is payable to all the shareholder, everyone from the largest to the smallest.  In other words it is a really expensive way for Large shareholder to extract money as they need to pay the same pro-rata to everyone else

First Rubicon 5%

Now as I noted in this blog post the first point which it would be important for a Fanownership vehicle to cross is 5%  (though worth noting the 100 person option which should be a doddle) this means that the Fans can call a general meeting an impel the board to answer questions.

So for as little as 5% or 100 Rangers fans owning £100 of share you can immediately get action....re read that and let it sink in.

Now the one thing Institutional investors don't like is hassle, not bad PR they IMHO mostly could not care about that. Remember it is not their own money they are investing it is part of a diversified client fund of some description so they have to respond with their investment algorithms as to what is happening, and hassle will almost certainly keep the share price low.

While a normal completely fluid market would normally mean that demand increase price it is IMHO that for initially only trying to by 5% and the PR knowledge of why it is being done that for this first small lump the price would not increase much if at all.

You can witness during today that 2.3million (4% of the Club) shares have been sold, which means they have also been bought and the share price is still bumping along the bottom, so why fans going after 5% would have some dramatic impact i am unsure of.

The fundamentals of the business are not changing as an example the recent transaction of 3%  a week or so ago also has had no impact on what the shares are currently worth.

So it appears that those that bought in at the top of the market are not going to earn money from share growth, i suspect those share being sold today are from pre IPO stock, and they cannot get a dividend from them so how can they make some sort of return from them..........

The CIC can sort this out.

Just as various parties gathered proxies for the Clubs recent AGM a fans group with significant monthly income can do better than that and do it more permanently.

The CIC can in fact offer directly a return to these investors in exchange not initially for the shares but for the proxies on a permanent and binding basis.

Contracted in such a way that the shares after a period are then sold to the CIC.

regrettably the reality is that to dispose of their shareholding these institutions will need to get a return, now that may not be that they need to make a profit it could just be less of a loss, but the Fanowned CIC can negotiate this and so not only can the income from the Fans buy Shares Directly it can also buy the proxies of the Institutions and so the Fans Can take back their Club

@rchrdtknsn