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Individuals

27%

26%

45%

Source: Value Line, Morningstar

Source: Value Line, Morningstar

All three companies are widely held by institutional investors. To break down the institutional investment, we examined the ten largest investors in each firm at the end of 2002 in Table 8.5, with the percent of the firm's stock held by each (in brackets). Table 3.2: Largest Stockholders in Disney, Aracruz and Deutsche Bank

Disney

Deutsche Bank

Aracruz - Preferred

Barclays Global (3.40%)

Allianz (4.81%)

Safra (10.74%)

State Street (3.10%)

La Caixa (3.85%)

BNDES (6.34%)

Fidelity (3.01%)

Capital Research (1.35%)

Scudder Kemper (1.03%)

Citigroup (3.00%)

Fidelity (0.50%)

BNP Paribas (0.56%)

Southeastern Asset (2.36%)

Frankfurt Trust (0.43%)

Barclays Global (0.29%)

State Farm Mutual (2.06%)

Aviva (0.37%)

Vanguard Group (0.18%)

Vanguard Group (1.93%)

Daxex (0.31%)

Banco Itau (0.12%)

JP Morgan Chase (1.83%)

Unifonds (0.29%)

Van Eck Associates (0.12%)

Mellon Bank (1.64%)

Fidelity (0.28%)

Pactual (0.11%)

Lord Abbet & Co(1.58%)

UBS Funds (0.21%)

Banco Bradesco (0.07%)

Source: Bloomberg

Source: Bloomberg

The ten largest investors in Disney are all institutional investors, suggesting that we are on safe grounds assuming that the marginal investor in Disney is likely to be both institutional and diversified. The largest single investor in Deutsche Bank is Allianz, the German insurance giant, reflecting again the cross-holding corporate governance structure favored by German corporations. However, the investors below Allianz are all institutional investors, and about half of them are non-German. Here again, we can safely assume that the marginal investor is likely to be institutional and broadly diversified across at least European equities rather than just German stocks. The common shares in Aracruz, where the voting rights reside, is held by a handful of controlling stockholders, but trading in this stock is light.7 The two largest holders of preferred shares in Aracruz, Safra and BNDES, are also holders of common stock and do not trade on their substantial holdings. The remaining shares are held largely by institutional investors and many of them are from outside Brazil. While there is a clear danger here that the company will be run for the benefit of the voting shareholders, the price of the voting stock is closely linked to the price of the preferred shares. Self-interest alone should induce the voting shareholders to consider the investors in the preferred shares as the marginal investors in the company.

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