Apollo355

Many high tech stocks don't pay out dividends. So I'm curious to know how a big investor who buys a controlling share survives without the cash flows... are they actually granted expense accounts when they purchase a certain large amount of shares? Does it work the same way with sport team franchise stakes and non public companies like Glaceau for instance? Just thought this might be a good discussion topic...

cthree

Dividends are usually paid out as a company slows its growth. Fast growing companies put their earnings into expansion rather than paying dividends. When there is nothing left to reinvest in and the earnings are just sitting around they pay out to shareholders instead.

When you buy a controlling interest you are basically buying the company and are an owner not an investor. You do this for strategic reasons. Large investors don't buy controlling interests, they aren't interested in buying the companies just the stock.

Apollo355

What if you're not buying a controlling interest but a minority stake to cash in on the cash flow would that be possible? I have heard of investors buying in stakes of sports franchises and clothing companies, but not sure if this is how it works.

cthree

You are thinking about something else, not stocks. Owning stock doesn't mean anything.