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Blackrock Investors Usurp Voting Power from Fund Managers

Story Highlights

Investors of passively managed investment firms are usurping more power to vote on shareholder matters. Does this steal the wind from fund managers?

Ahead of a U.S. Senate hearing Tuesday on the excessive voting power in the hands of index fund managers, a larger number of Blackrock investors have decided to take the voting power into their own hands.

Based out of New York, Blackrock, Inc. (NYSE: BLK) is a global investment management firm with about $10 trillion in assets under management. Blackrock is by far the largest investment manager in the U.S., offering services to clients across 100 countries.

Shares of Blackrock closed down 3.1% at $598.72 on June 13. However, BLK stock has lost 33.4% so far this year.

Investors Take Voting into Their Own Hands

Typically, fund managers of passive, index-tracking funds vote on behalf of their investors on topics ranging from climate change to executive pay. These firms are being scrutinized for the very same reason that gives the managers excessive powers to have decisions made in their favor. There is a growing concern from corporations about the fund managers’ vote on environmental, social, and governance (ESG) issues.

As per a WSJ report, in October 2021, Blackrock initiated a voting-choice platform through which investors of $120 billion worth of assets have agreed to vote for their own shares, bringing the total to $530 billion. This option is given to institutional investors, including pension funds and endowments that control around $2.3 trillion in passive equity assets at Blackrock.

Blackrock CEO, Larry Fink, has stated his intent to have all investors, both institutional and individual, have the freedom to vote for their own shares. Last year, BLK’s investment stewardship team, which votes on behalf of the passive funds, voted on about 165,000 different shareholder proposals for several companies worldwide, showing the sheer power that fund managers have when they vote on shareholder proposals. 

Target Price

With 11 Buys and two Holds, BLK stock commands a Strong Buy consensus rating. The average Blackrock price target of $869.08 implies 45.2% upside potential to current levels.

Stock Analysis

According to TipRanks’ Smart Score, Blackrock scores a nine, indicating that the stock is likely to outperform the market. Bloggers are bullish on the stock, and corporate insiders have bought BLK shares worth $2.1 million in the last quarter. Retail investors have also increased their exposure to BLK stock by 3.4% during the last 30 days.

Ending Thoughts

Blackrock is already taking proactive steps to give voting power to its clients. This should relieve retail shareholders since now the people voting on corporate decisions will be more responsible towards their choices.  

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