Jan 10, 2013

Super fund takes Rupert’s advice, sells out of News Corp

A prominent industry super fund has had enough with News Corporation and is selling its stock. It's a symbolic blow that could spark a wave of so-called ethical investment decisions.

Andrew Crook — Former <em>Crikey</em> Senior Journalist

Andrew Crook

Former Crikey Senior Journalist

A prominent industry super fund, the $1.7 billion First Super, will ditch its eight-figure holding in global media giant News Corporation, citing grave concerns over bloated executive salaries and poor governance.

Crikey can reveal the 72,000 member fund — jointly controlled by the Construction, Forestry, Mining and Energy Union’s forestry division and employer representatives — has commenced the process of selling down shares in News, which it has branded a rogue entity for failing to democratise its registry.

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15 thoughts on “Super fund takes Rupert’s advice, sells out of News Corp

  1. Burt Chris

    The CFMEU acting because a lack of governance? The hypocrisy is overwhelming.

  2. Mike Flanagan

    Burt Chris;
    Don’t confuse the super fund with the union.
    The union hipocracy you seem to infer has manifested itself in the best paid industry workers,outside the miners union, in Australia.

  3. zut alors

    Perhaps First Super deserves a new name: First Off The Sinking Ship.

  4. Ian

    I wish more superfunds would follow CFMEU’s lead not only in the case of News Corp but also in other cases especially with regard to the pay of CEO’s and board members which are gross and pulling further and further away from the rest of us. Superfunds should as a first step automatically oppose increases to executive pay in excess of the inflation rate UNLESS there is very good reason not to. The fund should make their decisions very public and certainly inform their members on a regular basis.

    Most individual shareholders, like myself, don’t have the power to influence these matters and our governments certainly don’t have the will so its up to the superfunds to act on their members behalf.

    If this problem is not addressed inequality will continue to increase and civil unrest will ensue on a bigger and bigger scale…the 1% vs the 99% story.

  5. Scott

    Interesting decision.

    From a short term perspective, now seems like not a bad time to sell NEWS. If you are a fan of technical trading, there are a few indicators pointing to the stock being slightly overvalued and a correction may be imminent (usual disclaimer applies…I am not your financial advisor, seek independent advice before investing/not investing etc).

    BUT, and it’s a big one, when talking about the long term investment horizon of most Super Funds, it’s absolute folly to sell NEWS. Governance issues aside (and I can see the point), it is an extremely well run company delivering great returns for fairly low risk. There aren’t too many media companies out there that returned 12.55%(compounded) a year over the last 3 years.

    Like him or not (and it appears on crikey it is mostly the later), Rupert (and his seconds) are driving the bus (or limo) well. For mine, to quote another great Australian, “Better the devil you know”.

  6. David Hand

    I owned some News Ltd shares about 10 years ago. I got out as soon as I recognised the gerrymander in the shareholding. It meant that Rupert could pay himself a huge salary and then pay no dividend to the vast majority of shareholders.

    News has always been a crappy investment.

  7. Scott

    @David Hand

    The thing to remember is that to a lot of investors, $1 worth of dividend is pretty much the same as $1 worth of capital gain. The only major difference is the tax treatment.
    Most US investors (where NEWS gets most of its capital from) actually prefer to get their profits through capital gains as they are taxed at lower rates (15%) than dividends (which get taxed at roughly same income rate as ordinary income). That is how mega wealthy people like Mitt Romney end up paying lower rates of tax…their income comes mainly through capital gains. Also why a lot of companies registered in the US do not pay dividends.
    BTW…you should have stayed with NEWS 10 years ago. You would have made a return of 7.55% (compounded) a year (and that period includes the GFC). Not too shabby.

  8. drmick

    News shares will double in value when he dies and he could do us all a favour at the same time. His mother died of shame you know? Wonder how many shares she had?

  9. Michael

    From a union?
    GFFAWWWW !!!!
    In the meantime they book an annual profit of 135% on News Ltd.
    Bet they don’t invest their profits on clean energy where losses over the last 5 years have been 1700%

  10. Liamj

    “clean energy .. losses over the last 5 years have been 1700%” .. ha ha, guess who gets their math from the Herald Sun.

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