Investing Company Funds

1

I own 20% of a privately owned company. This is going to increase in the future due to an inheritance (to 50%).
That company has a healthy amount of money in real estate and stock holdings. The real estate part performs quite good. If I’d own 100% of the company, I’d keep the real estate.

However, the stocks are not that great, part of the portfolio is stockpicked (bank advisor + CFO), part of it is in high TER funds. It hurts me to see the returns of the past 10 years. We all know that it would’ve been much more profitable if invested in VT for example.
I’d personally like to open an account at IB and invest all of it into VT.

I don’t know if this is rational thinking on my side. Companies probably should invest with less risk attached than 100% VT. But I also doubt that the stockpicking is less risky than 100% VT.

Fortunately I am able to propose some changes as I’m in a good relationship with the CFO.
Does anybody have some advice on how to act in this situation? Suggestions on how to convince the CFO/what asset allocation to follow?

PS: The CFO also suffers from sunken cost fallacy. It will be really difficult to change the whole portfolio right now as a good chunk of the stocks is in the red.

2

Who is member of the board ? Who are the other shareholders ? The board will choose the strategy and the CEO and CFO will follow it. If they don’t, the board can take somebody else. That is the best way to procede.

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3

It’s a family business. Four persons (including me) own stocks. Two of those (not me) are working in the company aswell.
To get my proposal through I’ll need two shareholders to agree. One of them will be easy to convince. The other one is the CFO.

But it’s probably a good idea that I’ll setup a meeting with them and propose them a different investment strategy.

4

Oh, ok, he is not exactly an employee haha. Is that a Gmbh or AG ? Then yes a general assembly/ assembly of associates is a good idea in this case.

5

It’s an AG.

Person 1: retired, doesn’t make decisions
Person 2: CEO, easy to convince
Person 3: CFO, hard to convince, but I need his approval in order to get the majority of shares
Person 4: me

6

Maybe speak with the CEO before the meeting and use him to help you convince the CFO ?

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7

I think you need a soft strategy. You don’t want to make the CFO look like he doesn’t grasp the intricacies of finance.

I’d start with complimenting the choices as optimal for the moment they were made, but with modern trends (digital transformation, de-industrialization, post-corona reality - up to you to pick a fashionable slogan) it may make more sense to do adjustments.

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8

Also a lot of things depend on personal relationship, for some people they wouldn’t want to be ambushed, especially in front of other people and would then just keep their position, etc.

Or maybe they’ll us her to convince the CFO :slight_smile: (sorry I felt like there’s always a lot of gendered assumption in that forum felt like at some point I’ll have to point it out, afaict at no point a gender for the CEO was specified :wink: )

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