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Where Are My Shareholder Perks?

Rick Aristotle Munarriz
September 20, 2006

It was great to be an investor in the 1990s. Not only were the bull-market gains sweet, but you wouldn't believe the stuff I got in the mail just for being a shareholder in certain companies. Rainforest Cafe would send me vouchers to get seated right away at its busy themed eateries. Disney (NYSE: DIS  ) would provide free membership in the Magic Kingdom Club, complete with discounts at the family entertainment giant's theme parks and retail stores. Pixar would send me full-sized posters of its animated features and even a VHS copy of its award-winning animated short film Geri's Game.

I didn't get these things because I was a journalist or particularly astute in the art of panhandling. All I had to do was be an active shareholder.

Times have changed, though. Rainforest Cafe got bought out by Landry's (NYSE: LNY  ) . Disney discontinued its Magic Kingdom Club card program in the fall of 2000. Pixar stopped sending out the goodies a few years before finally hooking up with Disney.

The day the doorstep dividends stopped knocking
I wrote an article detailing the various shareholder perks in 1998. I left out so many that I had to follow that up with a second article a few months later.

"Capital appreciation is the ultimate perk," I wrote at the time. It's true. A basket of freebies is no treat if your investment has tanked by a grander sum. However, if a token gesture inspires brand ambassadorship and can transform finicky traders into buy-and-hold investors, can shareholder perks really be that bad?

Some companies seem to think so. I have been an investor in theme park operator Cedar Fair (NYSE: FUN  ) for several years. Thanks to its generous 7% yield, I am better off today as an investor even if the share price is just about where it was three years ago.

As a kind springtime perk, Cedar Fair used to send out valuable coupon offers to investors with at least 100 units in the company. When you're a coaster-lover like me, you don't look gift discounts in the mouth. The "buy one, get one free" admission vouchers are nice to have unless you have a season pass. And even more substantial savings were possible through marked-down lodging rates at the company's Knott's Berry Farm and Cedar Point parks during the non-peak season.

It was a welcome perk, but it ended this year. During the company's quarterly report conference call shortly after the move, an analyst chimed in on the matter.

"So let me get to the most important question of all," he began. "What's the deal with getting rid of the investor coupons?"

He was only being smug. Analysts can be that way. However, karma has a funny way of kicking you in the hindquarters. Shortly after dissing unit holders, the company saw its shares hit a three-year low. Earlier this month, Cedar Fair lowered its guidance after failing to land the desired number of turnstile clicks at its chain of regional amusement parks.

It's only a coincidence, of course, but is it possible that Cedar Fair investors failed to show their usual patronage support this season? Can one petty decision spur long-term investors to bail on a stock?

I'm not selling. I believe in Cedar Fair. Mathew Emmert does too, as he singled out the units to Income Investor newsletter readers last year. However, I know that one small move did alter my travel plans this summer.

Last year, I chose to stay at the Cedar Fair-owned property adjacent to Knott's Berry Farm for a week as a pivot point to see many SoCal attractions. We wound up wrapping up many great days around town with even better nights at the park. This summer, I chose to spend just two nights at Cedar Point's Lighthouse Point before hightailing it over to Kalahari at the other end of the causeway.

All hope is not lost
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