Do you prefer doing business with a public/private company?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
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natureexplorer
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Do you prefer doing business with a public/private company?

Post by natureexplorer » Wed Mar 09, 2011 1:47 pm

All else equal, do you prefer doing business with companies in which you have a stake (public) versus companies in which you don't have a stake (private)?

centrifuge41
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Post by centrifuge41 » Wed Mar 09, 2011 2:26 pm

Well, since I have invested in VG Total Stock Market index, I guess I own a little bit of all of the public companies in the country, barring the sampling techniques that they use for small stocks.

I'll do my shopping wherever I get the best deal :) If Toys r Us has a new release $50 game with a $20 free gift card, I'll go there, even though they are private (owned by Bain Capital last time I checked). If a public company, like Sears/Kmart wants to offer a deal, I'll go there. I don't think I'm influenced to shop or do business with companies simply because I have equity in them. It's all good!

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steadyeddy
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Post by steadyeddy » Wed Mar 09, 2011 4:23 pm

Even if all else were equal, I don't think it would cross my mind.

Snowjob
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Post by Snowjob » Wed Mar 09, 2011 4:38 pm

Probably not the answer you are looking for but when possible I choose to shop at local privately owned establishments to support the local community and keep those folks in business. Sure I pay more, sometimes significantly more, but I feel these places play an important roll in the community and in many cases provide some additional decent paying jobs that otherwise might not be there.

More to what you were looking for though, I will always purchase a product from a company that I own individual shares in vs one that I dont. I will support the company that I have a personal stake in. My portfolio is almost exclusively in individual stocks on the equity side so its easy to make the distinction. If I was purely an index guy I probably wouldnt think about it at all.

chaz
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Post by chaz » Wed Mar 09, 2011 5:07 pm

I like WalMart - help the Walton family.
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scubadiver
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Post by scubadiver » Wed Mar 09, 2011 8:11 pm

I look at two things: price and quality.

The marginal profit that I earn as a shareholder based upon my business as a customer is insignificant in any company whose shares I own.

biasion
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Post by biasion » Wed Mar 09, 2011 8:26 pm

Generally I prefer small family businesses that are strictly run whose owners I know on a first name basis and I can trust. This does not mean there aren't people who are in small businesses who will come (late) unblock your toilet reeking of bourbon and slurring their speech and overcharge you after nearly breaking your toilet to pieces (check, it happened) however.

I have had success with larger companies, but the performance of stocks and the performance of the services run are two different things, and the latter can be much better estimated by "buying what you know", especially if you're a small business owner who is also "in the know".
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FrugalInvestor
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Post by FrugalInvestor » Wed Mar 09, 2011 9:34 pm

I like to go where I find the best value.
Last edited by FrugalInvestor on Thu Mar 10, 2011 10:31 am, edited 1 time in total.
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MP173
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Post by MP173 » Thu Mar 10, 2011 8:11 am

I am in sales. Years ago if a company was publically traded and it was an account, I would purchase the stock. My contacts always asked "do you still own our stock?" It gave us something to discuss...the overall direction of the company, new products, services, etc. Plus in at least 2 instances, I was able to talk directly to the CEO after the meeting and in both cases it made a difference in selling to the company.

On the other hand, my favorite store for shopping is the local Ace Hardware. These people have the service down to a art, vs the big box chains. Not as much selection, but fair prices and helpful people.

Big boxes are pretty much a way of life these days.

As far as my favorite fast food...McDonalds - love the stock, but not the food. Instead I turn to the local Gyros/Hot Dog stand for great food, value, and service.

It all depends.

Ed

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anthau
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Re: Do you prefer doing business with a public/private compa

Post by anthau » Thu Mar 10, 2011 11:46 am

natureexplorer wrote:All else equal, do you prefer doing business with companies in which you have a stake (public) versus companies in which you don't have a stake (private)?
Personally I disagree with the thesis that I have a stake in public companies. Sure, I may hold an infinitesimal share in them, but at the end of the day, public companies are loyal to their institutional shareholders, not me, least of all as a customer.

For similar reasons, I think, to Bill Bernstein's (The Investor's Manifesto, pp 139-42), I prefer to deal with mutually or privately held companies, especially in the financial services industry.
Best, | | Anth

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natureexplorer
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Post by natureexplorer » Thu Mar 10, 2011 9:52 pm

Overall there seems to be somewhat of an aversion of doing business with public companies. Some mention that they trust private business more. There seems to be an inherent distrust of public companies. I find this interesting considering everyone on this board invests in stocks and some even in corporate bonds.

normaldude
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Post by normaldude » Thu Mar 10, 2011 10:00 pm

All else equal, I much prefer doing business with public companies.

Public companies have a lot more info & news available about them. They have to file financial statements with the SEC, and tons of journalists & research analysts are writing stories about them because of their stock price movements and rumors.

Private companies are a black box. It's very hard to tell where they stand financially. There's much less information & news out there. Everything can seem great, but then they shutdown suddenly with no warning whatsoever. You don't know how much debt they have on their balance sheet, or how much free cash flow they have.

SP-diceman
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Post by SP-diceman » Thu Mar 10, 2011 10:26 pm

natureexplorer wrote:Overall there seems to be somewhat of an aversion of doing business with public companies. Some mention that they trust private business more. There seems to be an inherent distrust of public companies. I find this interesting considering everyone on this board invests in stocks and some even in corporate bonds.
Yeah, a lot of odd strange thinking.


Thanks
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anthau
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Post by anthau » Fri Mar 11, 2011 12:28 am

natureexplorer wrote:Overall there seems to be somewhat of an aversion of doing business with public companies. Some mention that they trust private business more. There seems to be an inherent distrust of public companies. I find this interesting considering everyone on this board invests in stocks and some even in corporate bonds.
There's a distinct difference between being a customer of a company (whether public or private) and being an investor in a company; in fact the two seem in fierce competition, if not diametrically opposed. If I think that a public company, all else being equal, is more likely to take its customers in the name of profiting its owners (the shareholders), what's inconsistent with investing in the sheep-sheering business but not volunteering as a sheep?

Edit (Added as an afterthought):
I find it odd that Bogleheads would see it as strange and inconsistent to prefer being a customer of a non-publicly held company. Aren't Vanguard funds cheaper (and thus better for us as customers) because of the company's mutual structure? Are we somehow dragging down "the market" by not preferring Schwab and TD Ameritrade over Fidelity and Vanguard?
Best, | | Anth

Beantown85
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Post by Beantown85 » Fri Mar 11, 2011 11:02 am

I prefer local sub / pizza shops to places like Subway, Pizza Hut or McDonalds.

Other than that, I don't think too much about whether a company is private or public.

seess
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Post by seess » Fri Mar 11, 2011 6:01 pm

biasion wrote:Generally I prefer small family businesses that are strictly run whose owners I know on a first name basis and I can trust. This does not mean there aren't people who are in small businesses who will come (late) unblock your toilet reeking of bourbon and slurring their speech and overcharge you after nearly breaking your toilet to pieces (check, it happened) however.

I have had success with larger companies, but the performance of stocks and the performance of the services run are two different things, and the latter can be much better estimated by "buying what you know", especially if you're a small business owner who is also "in the know".
Yes, You are right. I have similar opinion. I am

working on it.

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