[adventured]

> can I short on the normal exchange and buy on the long term exchange for some free voting power that increases over time?

Buying voting power on the long-term exchange isn't free, your capital is allocated. You have finite capital. Your cost for each unit of voting power declines perpetually so long as you hold it, it never goes to zero (free).

You can view the shorting as paying for your purchase in the long-term position, however you could view it that way for shorting any other company just as well. It's meaningless as a premise or issue.

[cujic9]

Contrived? Yes. Meaningless? No.

Voting rights are powerful. That's the point of the long-term exchange.

In existing exchanges, going long and short in equal amounts on the same stock simply cancel each other out.

But in a "long-term exchange", taking this same position (or lack thereof) gives me a valuable asset: voting power that grows over time.

[dmurray]

> Voting rights are powerful. That's the point of the long-term exchange.

> In existing exchanges, going long and short in equal amounts on the same stock simply cancel each other out.

Not really, for voting purposes. You can buy the stock, borrow the stock, sell the borrowed shares and end up with "free" voting rights and no economic exposure to the stock. I say "free" because you may have to pay someone a few percent to lend you the stock.

You might say centralised clearing prevents this from happening - that my account will always just show a position of zero shares so I have no votes. But even in that case, I can open two accounts, one long and one short, with the same effect.

[eries]

Actually our mechanism prevents this. It’s pretty clever if I do say so myself, but until we go public with the details you’ll have to take my word for it

[valuearb]

it’s a dumb idea solving an imaginary problem. Better to spend your energies on something more productive.

The governance problem is that public companies are allowed to restrict shareholder rights to the point they have no say over board composition. Boards are incestous collaborations between insiders and friendly outsiders, whose purpose is to maximize their compensation at the expense of shareholders.

That’s the problem to solve and your idea only makes it worse.

[cma]

We'll see more strategies like voting against the company's interest in order to benefit one's other portfolio holdings. You just need enough to tip a split vote (which at least means a large number probably don't believe it is against the company's interest; but if the voter has inside info there wouldn't be much stopping them as it isn't an inside trade..).

[stale2002]

Sure, but the price of the stock probably reflects that voting power.

For example, right now there are different share types that you can buy from the same company that have different voting rights.

[cujic9]

Yes, but... the article suggests that in the long-term exchange, the voting power resets with a change in ownership.

So while a share that has accumulated a lot of voting power is valuable to me, you wouldn't necessarily pay any more for it, since the power doesn't transfer to you.

[hkmurakami]

this is reminding me of LLCs holding real estate in California, where the LLC and bought and sold but not the real estate, thereby preserving the low tax basis for prop13 purposes.

[njarboe]

Does this really hold up? I don't think so. I remember reading that under the law that an LLC that just holds property for the purpose of subverting re-assessment upon transfer, is not legal (or the reassessment happens when the LLC is sold, no free ride under prop 13). I would also think this doesn't work or every piece of property in California would just be owned by a separate company. If it does work, I'd like to know so I can set up my LLC for my house when I want to sell it. Reducing the property tax by $1000 a month should be worth quite a bit in this low interest environment.

[stale2002]

Well, but the original owner loses the power. So if you want to convince an owner to throw away their voting power, you'd have to pay them a higher price.

[eries]

How bout that...