“Who owns the world?” asks Dr. Joseph Mercola on his blog, Mercola.com. You can find all over the internet that BlackRock and Vanguard own nearly everything, with major percentages of many public corporations listed as being owned by the two money managers and, to a lesser degree State Street. To an extent, these assertions are correct. Ownership of shares in those companies are registered to accounts maintained by BlackRock or Vanguard. But the investors who own the accounts are the true owners of the shares. The question is, who is in control? Mutual fund and ETF shareholders give up their right to vote their shares. BlackRock and Vanguard management do the voting. Now with ESG all the rage, are they voting their politics with your money? It’s a serious issue. That’s where things get tricky. They get to vote with the power the investors bought. You invest, and they win. Mercola discusses the power these money managers have, writing:
Until recently, it appeared economic competition had been driving the rise and fall of small and large companies across the U.S. Supposedly, PepsiCo is Coca Cola’s competitor, Apple and Android vie for your loyalty and drug companies battle for your health care dollars. However, all of that turns out to be an illusion.
Since the mid-1970s, two corporations — Vanguard and Blackrock — have gobbled up most companies in the world, effectively destroying the competitive market on which America’s strength has rested, leaving only false appearances behind.
Indeed, the global economy may be the greatest illusionary trick ever pulled over the eyes of people around the world. To understand what’s really going on, watch Tim Gielen’s hour-long documentary, “MONOPOLY: Who Owns the World?” above.
As noted by Gielen, who narrates the film, a handful of mega corporations — private investment companies — dominate every aspect of our lives; everything we eat, drink, wear or use in one way or another. These investment firms are so enormous, they control the money flow worldwide. So, how does this scheme work?
While there appear to be hundreds of competing brands on the market, like Russian nesting dolls, larger parent companies own multiple smaller brands. In reality, all packaged food brands, for example, are owned by a dozen or so larger parent companies.
Pepsi Co. owns a long list of food, beverage and snack brands, as does Coca-Cola, Nestle, General Mills, Kellogg’s, Unilever, Mars, Kraft Heinz, Mondelez, Danone and Associated British Foods. Together, these parent companies monopolize the packaged food industry, as virtually every food brand available belongs to one of them.
These companies are publicly traded and are run by boards, where the largest shareholders have power over the decision making. This is where it gets interesting, because when you look up who the largest shareholders are, you find yet another monopoly.
While the topmost shareholders can change from time to time, based on shares bought and sold, two companies are consistently listed among the top institutional holders of these parent companies: The Vanguard Group Inc. and Blackrock Inc.
Pepsi and Coca-Cola — An Example
For example, while there are more than 3,000 shareholders in Pepsi Co., Vanguard and Blackrock’s holdings account for nearly one-third of all shares. Of the top 10 shareholders in Pepsi Co., the top three, Vanguard, Blackrock and State Street Corporation, own more shares than the remaining seven.
Now, let’s look at Coca-Cola Co., Pepsi’s top competitor. Who owns Coke? As with Pepsi, the majority of the company shares are held by institutional investors, which number 3,155 (as of the making of the documentary).
As shown in the film, three of the top four institutional shareholders of Coca-Cola are identical with that of Pepsi: Vanguard, Blackrock and State Street Corporation. The No. 1 shareholder of Coca-Cola is Berkshire Hathaway Inc.
These four — Vanguard, Blackrock, State Street and Berkshire Hathaway — are the four largest investment firms on the planet. “So, Pepsi and Coca-Cola are anything but competitors,” Gielen says. And the same goes for the other packaged food companies. All are owned by the same small group of institutional shareholders.
Action Line: Your Survival Guy prefers owning and controlling individual stocks and bonds over ceding control of voting power to mutual fund companies with their own agendas. When you want help building a portfolio of individual stocks and bonds that you control, let’s talk.
E.J. Smith - Your Survival Guy
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