Why does Manulife want me to sell my shares?

March 23, 2008 6:21 AM

Why does Manulife want me to sell my shares?

A few years ago I was given 15 shares of Manulife stock. Nothing much happened with it until this year, when they started sending me "voluntary small shareholder sales program" announcements. If I participate, they will sell all my shares along with a bunch of others and pay me the average selling price per share from the week in which my stocks were sold.

Is this kind of program common? Are they just doing it because dealing with small shareholders isn't worth it, or does it indicate something about the state of the company? And is there any compelling reason to participate or not participate? I would feel equally okay about keeping these shares or selling them; I have other investments, and I don't need the cash right now.

posted by climalene to work & money (8 comments total)

People who hold small quantities of shares drive up costs (related to mailing, voting, paperwork, etc.) disproportionally. It's simply more efficient for them to have fewer shareholders who each own more shares. That's why.
posted by pmurray63 at 6:48 AM on March 23

It could also mean that the company has decided to buy back shares, starting with the smaller investors.
posted by Thorzdad at 7:19 AM on March 23

Why you might want to sell:
- Selling small quantities of stock can sometimes be self-defeating, because brokerage fees might consume a significant portion of the value. This program would minimize that.
- It would simplify your recordkeeping, etc.

From the press release:

"This voluntary program is designed to provide odd-lot shareholders an economical and convenient means of selling their shares," said Terri Neville, Assistant Vice President, Shareholder Services. "Small shareholders who might otherwise have a difficult time selling or face high fees to do so can choose to sell their holdings through the program by Internet, phone or mail. It's a simple process and the costs are reasonable."

Manulife has approximately 150,000 odd-lot shareholders worldwide, representing less than one per cent of issued and outstanding common shares. "We offered a similar program in 2005 and more than 45,000 shareholders participated. Their feedback was that they appreciated being offered the opportunity and found the program easy to use," added Ms. Neville.


Why you might not want to sell:
- A glance at Yahoo Finance indicates that they're in good shape. Analysts seem to think it's fairly valued. It's paying steady dividends, and it split back in 2006.
- You don't find it difficult or expensive to keep, and you don't anticipate selling it anytime soon.

But closer reading of the press release reveals this may all be a moot point: "The Program commences February 5, 2008 in North America and will expire at 5:00 p.m. (Eastern Time) on March 12, 2008, unless extended by the Company." Did they extend it?
posted by pmurray63 at 7:22 AM on March 23

Yes, they extended the program until April 18. Thanks for the research and answers so far.
posted by climalene at 9:29 AM on March 23

sometimes a company will buy back stock when it is doing well enough to buy it back, but anticipates doing much better in the future.
posted by snofoam at 4:07 PM on March 23

These programs exist mainly to persuade small shareholders to sell their shareholdings because as a group they require a disproportionately large amount of administration. See for example O2 in the UK: "The buyback was aimed at helping O2 to cut its unusually large base of small investors and cut the associated administrative costs. "
posted by patricio at 4:26 AM on March 24

Dang ... I've got this on my watchlist now. I might actually jump in and buy a couple lots.
posted by RavinDave at 7:53 AM on March 24

I think this is purely an attempt at reducing costs, not the opening salvo of a larger share buyback program as some have speculated. A Motley Fool story that I found while researching my previous answer (via the Yahoo Finance page that I linked to) noted that its days of spectacular growth were behind it, but it seems to be a steady performer worth considering. So as long as you have the right expectations for it ...
posted by pmurray63 at 2:23 PM on March 24