Monday, September 26, 2005

The Politburo mentality is alive and well in American publically traded corporations

Talk about ballot box stuffing. I drew 4,000,000 plus proxy votes for my General Mills proposal. While not close to winning there's no way to know the real number of actual shareholder votes in opposition. SEC rules allow General Mills vote any proxy for itself not voted by a shareholder. Totalitarian states usually report winning elections with close to a 100% of the vote right up until the day they get booted out!

A big surprise at the meeting occured when the company's retired previous chief counsel announced he backed my proposal. Another retired executive told me the company would be a tempting takeover target for Nestle. As an investor, the only reason I hold the big foods is they are potential takeover, or merger targets. Clearly consolidation is in the cards for the food industry.

Showed up with fathers rights demonstrators dressed in superhero costumes. Company knew about this in advance. Flooded the venue with uniformed and plainclothes security. Even posted snipers on the auditorium roof. They called the Minneapolis Police to try to drive us off the sidewalk in front on the venue. That ploy didn't work.

Hoping for big fathers right turnout at my next appearance at the Procter and Gamble meeting October 11. My shareholder below has "sex appeal".

Shareholder Proposal No. 2

Mark Klein, M.D. has given notice that he intends to present for action at the annual meeting the following resolution:

The shareholders recommend Procter & Gamble hire an investment bank to explore the sale of the company.

In my opinion the GOLD STANDARD test of investment return is PURCHASING POWER with respect to the most sought after consumer goods and services, e.g. housing. In recent years Procter & Gamble share values failed that test because of largely unappreciated, negative economic trends combined with effects of the maturity of P&G’s product line.

Since 1999, the nominal share price increased about 19% as of December 7, 2004 when this proposal was completed. Purchasing power-wise P&G shares also declined significantly over the same period with respect to homeownership. The national median home price rose 37%, and in very desirable cities like San Diego over 100%.

In my opinion the principle driving force for such severely escalating prices is feminist careerism which vastly expanded the fulltime workforce without an increase in REAL WAGES. The BUYING POWER of earnings halved since the 1970s because most families today need two incomes to almost equal the buying power one had 30 years ago. Put another way most women working fulltime essentially work for nothing.

Busy, overworked parents have little time to nurture and protect their marriages. Hence more competition for scarce housing from today’s 50% divorce rate, and from young adults now so skeptical of the durability of a loving commitment they marry late, or not at all.

Just Economics 101 supply and demand theory: Too much consumer demand chasing scarce commodities like homeownership.

In my opinion further worsening P&G’s dismal share performance since 1999 is the maturity of its current business operations. Desperate to achieve breakout earnings to ignite the share price P&G developed Intrinsa, a testosterone patch often mischaracterized as the female “Viagra”. As a physician, I warned P&G about toxicity issues several months before the FDA refused to license Intrinsa. Testosterone is a very toxic with few therapeutic uses.

I also questioned P&G’s breathtaking lack of understanding of the psychodynamics of female sexuality. Pretty safe to make implicit beauty promises for shampoo and bath soaps. “(but Intrinsa’s) moonlight courtship promises to enhance women’s libidinal lives will likely result in giving new meaning to the shareholders’ detriment of the Bard’s ‘Hell hath no fury’.” (5/15/04 letter to board member Robert Storey).

From my 12/2/04 FDA testimony in opposition to licensing Intrinsa.

“As an investor, and trustee for family accounts, I will sell our Procter & Gamble should Intrinsa be approved. The potential litigation risks for the company are so great in my opinion holding Procter & Gamble violates the prudent investor rule.

‘I believe Intrinsa is the most hazardous non-narcotic ever presented for FDA approval. I urge it be rejected for any use.”

Given economic trends undermining the shares’ BUYING POWER and product line maturity P&G should be sold to realize maximum shareholder value.

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