Alright, I don’t understand stocks all that well. But when you buy stocks you own a decimal percent of a company, correct? So how much stock of, lets say Microsoft, would I need to buy to own about 25% of the company?
Are you even allowed to own that much of a company if you are not involved with it yourself?
There are approximately 11 billion outstanding shares of MSFT. 1/4 of that is about 3 billion shares. Current price per share is about $27. So you’d need about $81 billion to buy 1/4 of MSFT.
If you have $81 billion sitting around, you might want to read up on a thing called “diversification.”
Sure you can own 25% of a publically traded company.
But, if you make an acquisition such that you will own more than 5% of a publically traded company, you have to file a form (13D) with the SEC. This becomes public information.
Furthermore, if you own more than 10% of a publically traded company you have to file a form 3 and then a form 4 if your holdings change. This information also becomes public.
On the other hand, Berkshire Hathaway has only 1.5 million shares outstanding, so you only need 375,000 to own 25% of the company. Mind you, the price is $83,600 per share, so you will still need to lay out $31 billion and change.
Most online listings of a given company include both the “outstanding shares” and the “float” which is the number of shares being publically traded (not held by insiders, 5% owners, etc). Look at a few of them. If that isn’t listed, usually the companies “market cap” is, which is the outstanding shares times the current price.
Yes, you could theoretically buy 25% of the shares, but there is a little matter of getting 25% of the current shareholders to sell. Even extremely active issues seldom trade more than a few percent of their float in a day, and much of that action will be by short term traders who are effectively buying and selling the same shares on a daily basis. For some companies, a large percentage may be held by insiders and institutions who have no intention of selling any time soon. If you start buying enormous blocks on the open market, you’re going to drive the price up, as potential sellers dry up, and signal to everybody in the world that you are trying to acquire a massive percentage of the company. They’ll know as soon as you hit 5% anyway, since you have to file with the SEC, as mentioned above.
Yes – buying up a controlling interest in a company without the consent of the company’s current management is called a hostile takeover. They happen from time to time, and you might remember back 10-15 years ago they were pretty frequent occurances. My understanding is that most large publicly traded companies have so much stock outstanding and in so many hands, that ~20% ownership will give you control over the management of the company.
–Cliffy