I was walking around Disney World in Orlando the other day and couldn’t help but think about all the money I had spent that day. The average person can’t set a foot into Disney World without spending a minimum of $150, and we all know that it’s always crowded. I started trying to calculate in my head how much Magic Kingdom was making that day, keeping in mind that it’s just one of the four parks in Orlando, not to mention Tokyo, Los Angeles x2, Paris…
Of course, it cost a lot to operate and manage these parks, but I knew they must be brining in heaps of cash too. Just getting in is just the beginning, I observed everyone around me paying extra to experience new Tron ride, paying for Disney’s a Genie+ pass (which grants access into ‘lightening lanes’, breakfast, lunch, churros, soo many $6 water bottles, merchandise, and dinners.
On the other hand, I noticed a few dads wearing shirts sarcastically stating “most expensive day ever” and I couldn’t help but wonder why people came here. I had to look in the mirror and ask myself the same question. It was hot as hell. Even in mid-October. We’re all standing in line for hours just to hop on a ride that lasts a minute or two. I felt like I had fallen for a trap. On the other hand, you can’t deny the joy of simply being in that theme park environment.
We started the day at 90 degrees, but once the sun went down (and I had an ice cream sundae), I felt chilly. I went to buy myself a sweater and convinced myself the $160 was worth it since it would become a generational keepsake. Lol. While I was walking through the Disney store, I started to notice that most of the Disney merchandise mentioned ‘Walt’. I remembered that Disney was not established by a big eared mouse, there was a single man behind this brand. This led me to wonder, where is all this money going?
“The Disney family must be so rich,” I thought to myself. Of course, I hit the internet immediately.
I searched “how much is the Disney family worth?”
To my surprise, I read an explanation which stated that the Disney family owns less than 3% of the Disney brand. Given the fact that Disney is worth almost $157 billion and brings in around $80 billion in revenue per year, I’m sure the family is still doing quite well. “But who’s taking home the largest chunk”? I wondered
I present to some, and reacquaint many others with Vanguard Group and BlackRock. For anyone who is not familiar, Vanguard is an investment management company that currently has ownership in many of the companies we utilize everyday from food products, to vehicles, hospitals, weapons and more.
Just to name a few companies they have a large holdings in; AT&T, Verizon, Procter & Gamble, Wells Fargo, BofA, JPMorgan Chase, Walmart, Coca-Cola and Coca-Cola European Partners, PepsiCo, CVS Health, Walgreens, Starbucks, McDonalds, Tyson Foods, Home Depot, Macy’s, Gap, Kellogg, Kraft Heinz, Hershey, Hasbro, United Parcel Service, Clorox Co, Avient Corp (plastic manufacturer), Disney of course, Sirius XM, Aflac Insurance, General Mills, Waste Management, Target, Goldman Sachs, Invesco, DTE Energy, Kaiser Aluminum, Clearway Energy, which is one of the largest renewable energy owners in the US.
Almost all of these are billion dollar companies, and most of the profits are going to the same groups. (So I thought)
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Try it for yourself. Search any widely known company you can think of, and you will see what I’m talking about. I searched “Delta Airlines majority owner” and the answer was “Delta Airlines largest shareholders include Vanguard Group Inc, BlackRock Inc, Vanguard Total Stock Market Index Fund Investor Shares, Vaguard Mid-Cap Index Fund, Vanguard 500 Index Fund Investor Shares. All of which are under the Vanguard umbrella.
I did the same thing with Foot Locker, Williams-Sonoma cookware company, One Gas which provides natural gas distribution services to over 2 million people across Kansas, Oklahoma, and Texas. Who is the first or second largest shareholder? You guessed it. My point in numbers is that Vanguard and BlackRock are actually the top shareholders of 88% of companies in the S&P 500 and have over $17 trillion in assets that they manage. That number is so hard to fathom, but spoiler alert*, this ownership is not simply in the hands of the owners of BlackRock and Vanguard as I initially assumed.
As I tried to wrap my mind around how this was possible, I started to get a little anxiety. Who knows who runs these large institutions and what are their intentions when it comes to my car, my food, my clothing, my technology, the planes I travel on, the news I listen to, etc.
I then decided there was no way I would allow the same two companies to get a majority of my dollars.
“No longer will I mindlessly support such greedy organizations,” I thought.
I even began a pledge with myself to support more local brands and founder led brands. Which is still plan to do. But to be clear, this situation is not what actually what I thought it was.
Let’s talk about Vanguard and BlackRock a bit more. You may have heard of these companies referred to as the ‘puppet masters’ of America’s largest corporations. I saw a lot of worried Youtube videos and TikTokers online trying to educate their followers on the dangers of having just two companies have so much control. Someone even claimed their owners had more control than the President of the United States. So I wanted to dig a little deeper and see how true that was.
For anyone who is not aware, ownership is granted to owners through shares, making them shareholders. Shareholders get various rights and authorities, one of which being voting rights. These votes grants various authorities such as, the power to influence any mergers and acquisitions, elect the c-suite officers, and make any other important decisions. With that being said, many people think that the top guys at Vanguard and BlackRock have significant influence over how these companies operate.
When anyone is a common shareholder in a company, no matter how small, they are given voting rights when the company makes its quarterly or annual decisions. If you have a Robinhood account and have invested in any individual stocks, you have probably seen alerts to remember to vote, or to join a quarterly earnings call. This is because you have genuine ownership, and the right to know how your money is being used, and also to get insight from the company’s leadership team to determine if you support the direction the company is going in.
By buying stock in Vanguard or BlackRock, you would gain access to their entire portfolio of because they function as asset managers for clients. Although B + V have these voting rights, we can all get a (small) piece of the pie by investing with them because you get access to every company in their portfolio. And as you can see, they really do have access to it all. They manage the shares that very large institutions invest through them, but the money is not actually theirs nor are the shares ultimately theirs. There is an argument that these companies can still flex their power over their portfolio companies by withholding or bribing capital to get their desires met.
That argument holds no weight since a majority of the money invested through these companies is indexed, meaning they do not necessarily have direct control over how the company operates. With BlackRock specifically, over 66% of its funds are indexed and nearly 80% for Vanguard. Ever heard of an Index Fund? If so, you know the individuals behind the fund do not have much control over how the funds are allocated.
So yes, at first glance, I can understand why seeing the same two companies owning large stakes in nearly every company may seem concerning, but this ownership is actually granted to all the individuals and institutions that allow them to manage their assets. My only argument would be as I mentioned before that the small business has a very hard time competing with these companies that are backed by trillion dollar asset managers. So I would encourage anyone reading to take the time to read who owns the companies behind your items while shopping. Supporting a founder owned business makes a much bigger difference for them than the well-known names. It also keeps the diversity in our products and in our lives because they need the support to remain in business.
A casual October day at Disney World caused this deep dive and I was excited to share with you all. Especially if you weren’t aware, or if you were seeing any of the angry TikTokers out there who read a headline and find themselves immediately feeling outraged.
