Research Notes: The Best Shareholder Perks

How shareholders can get free stuff, save money, and even make money

Highlights:

• Ahead of Black Friday, we look at shareholder benefit programs that offer discounts and freebies to investors.

• There are some interesting options: Inspirato offers free trips away. And would be an excellent choice if it weren’t for a weak balance sheet.

• Discounts and merchandise are available from a number of companies, though not at the level that can drive investment decisions (as is the case in Japan).

• A basket of eggs and lavish gift card rewards are among the most intriguing options.

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The idea of giving benefits to shareholders isn’t new. In the Japanese market, it’s particularly popular. Per Wikipedia, 35% of companies offer some kind of benefit, and the practice dates back to the late 19th century. There’s even evidence that shareholder benefits in Japan lead to short-term outperformance.

In the U.S., such programs remain relatively rare. But a few sites are trying to increase their popularity, and there are several programs which are potentially material for smaller positions.

On a short week ahead of that most American of holidays — Black Friday — we’re providing a guide to some of the more interesting shareholder benefit programs out there. We’ll take a fundamental look at some of the stocks as well, because freebies alone don’t make an investment case.

Cruises, Hotels And Trips

A number of travel companies offer shareholder benefit programs

Carnival Cruise Lines, Royal Caribbean, and Norwegian offer onboard credit to shareholders who hold 100 shares for at least three weeks (Royal Caribbean has a five-week holding period). In each case, shareholders have to touch base a few weeks ahead of the cruise.

For each company, the credit gets larger as the cruise extends: $50 for under 6 days, $100 for 7 to 13 days, and $250 on a cruise of two weeks or longer. Certainly, it’s not enough to own any of these stocks. But the fact that cruise operators offer shareholder benefits does make sense. For those businesses, there’s likely a decent overlap between their most common customers and their most common shareholders.

Hotel operators have programs as well. Giant InterContinental Hotels offers discounts, but only to shareholders who have their stock registered with the company (as opposed to being owned in ‘street name’ as a broker). France’s Accor gives status to shareholders, who become Gold members and benefit from upgrades, early check-in, and late check-out. Shareholders of at least 64 shares (about 2,100 GBP / US$2600) in the U.K.’s Whitbread, operator of Premier Inn, get free breakfast and 10% off food.

Two badly struggling early-stage operators also offer what seem like more significant packages. Selina Hospitality PLC, a travel company targeting Gen Z/millennial customers, offers discounts on room prices and food and beverage. The biggest shareholder benefit provides 2 free tickets to the company’s “Mantra” retreat, which seems like a deal: those shares only require a three-month holding period of 5,000 shares, which requires an investment of just $1,400 at Monday’s close, but each ticket costs $900. That assumes, however, that an investor wants to pay to travel to Panama for a wellness retreat full of yoga-loving twenty-somethings. (We can see arguments both for and against.)

The Math On Insipirato

Inspirato will give shareholders a free trip if they own 2,500 shares for six months. What makes the offer particularly compelling is that a trip is earned for each 2,500 shares, up to a total of five.

One catch is that shareholders have to be a member — and memberships aren’t cheap. Inspirato’s Club program costs $7,800 for two years as part of a current special. But for a well-off traveler with the ability to work remotely (or the time to travel five times in two years), the math can work. Inspirato destinations and properties can be rather spectacular; a price of ~$1,600 per stay is a pretty good deal. (The price only covers lodging, not the full trip.)

But there is a bigger catch, which is that to max the benefit out, investors have to own 12,500 shares of ISPO for six months, and that seems a bit dicey:

source: Koyfin

ISPO’s chart is influenced by the fact that it had a steep rally after its SPAC merger last February. There were similar rallies in other de-SPACs which, owing to high redemption rates, had tiny floats after going public. For Inspirato, a stunning 98.5% of shares were redeemed before the merger close.

In part because of those redemptions, Inspirato has a capital problem. The company expects an Adjusted EBITDA loss of $30 to $45 million this year, but even with a $25 million investment from Capital One Ventures only closed the third quarter with $51 million in cash. As a result, after a reverse split ISPO has continued to fade, closing Monday down more than 80% since the Q2 release in August. The company’s market cap is down to $15 million, removing equity sales as an option.

And so it is exceptionally risky to own this stock for the six months required to achieve the five trips — and not at all certain that the company will be around by the time trips three, four and five are taken. Given it takes $55,000 in stock to get the five-trip benefit, the downside risk to the investment more than offsets the seeming discount offered in the product.

That’s a shame. Inspirato has quite an intriguing product, one that can provide excellent value for the right customer and probably could have driven real profitability with the right model. Instead, it appears to have wildly overbuilt its portfolio of leased properties, using up its capital in the process.

Swag And Discounts

Two relatively new platforms, StockPerks and Tiicker, seem to be trying to drive interest in shareholder benefit programs. Through those sites, there are some retailers offering discounts and free merchandise.

Footwear manufacturer Wolverine World Wide offers a 30% discount on merchandise. Shareholders of 500 shares in iRobot can get $90 off certain models (though it’s not clear whether similar discounts are widely available). Columbia Sportswear sends unspecified coupons and discounts to shareholders through Tiicker. Electric vehicle charging station developer Wallbox offers 15% off a residential charger for investors who own 200 shares. With the stock down 69% since July, that offer looks better than it did (investors only need to own a little over $300 in stock to save ~$100 on the charger).

One of the more surprising names on the list might be luxury conglomerate LVMH, which offers a pretty solid deal. Shareholders need to own just one share in order to visit locations such as the Hennessey cellars. LVMH also offers discounts on wine and publications. The U.K.’s Mulberry, a much smaller luxury play, has a seemingly solid offer. In fact, for Mulberry fans, the investment can pay for itself. Shareholders with 500 shares (830 GBP worth, or about US$1,040) can save up to 1,250 GBP per year with a 20% discount.

Beyond LVMH, wine aficionados can get free tastings from Crimson Wine Group; owner-exclusive events, VIP winery tours, and free business cards from Willamette Valley Vineyards; and a tour and tasting at Chapel Down, a publicly-traded winery in southeastern England.

Companies of all kinds also offer free merchandise. Downstream energy play Delek, which we recommended in April, offers a free polo shirt through Stockperks. Shareholders in Co-Diagnostics can get face masks, a hat, a polo, and a hoodie, though they have to own 1,000 shares ($1,440 as of this writing) for a month. Through ticker, shareholders of 50 shares in Starbucks, Expedia, or Nordstrom can get a T-shirt. Spatial data play Matterport offers a free smartphone mount plus tripod, which retails for about $90 (investors need to own ~$2,500 in stock, however). Wallbox investors can add an insulated coffee tumbler to their discount.

Admittedly, there still are some kinks in the system. Both Stockperks and Tiicker require that investors connect their portfolios to the respective apps, which might raise data privacy/safety concerns from some investors — but the links also don’t always work (or update) as advertised. I have a very small position in OTC-listed ginger beer manufacturer Reed’s, which offers a copper mug and a free case of ginger beer or soda (a double-digit yield on cost at the 100 share minimum). But the instructions from Stockperks on redeeming the offer for the case aren’t entirely clear, and the process not particularly simple. That friction adds some complication for programs whose value is not that high to begin with. Shareholder benefit programs in the U.S. and Europe are worth checking out briefly, but it’s hard to see Japanese-style abnormal returns occurring based on the offers out there at the moment.

The Egg Dividend

But there are a couple of exceptions. One is Vital Farms, a packager and distributor of pasture-raised eggs. Every quarter, investors with 100 shares ($1,287 at Monday’s close) can get a coupon for a free 18-pack of eggs.

Again, there are frictions. When I first qualified for the offer, Vital Farms was out of stock (they had apparently run out of coupons, not eggs). But eventually, the coupon did arrive (along with a book of pictures taken by chickens — not making that up — and a baseball cap). And given that an 18-pack of Vital Farms eggs, at my grocery store, sells for about $12, the annual ‘egg dividend’ in VITL is $48 — a near 4% yield, tax-free¹.

Aside from the egg dividend, there is an interesting story here. Vital Farms is growing nicely, with volume up 13% year-over-year in Q3. Increasing concerns around animal welfare should drive category growth for years to come, providing a tailwind behind results. Yet the stock remains reasonably cheap: ~18% of the market cap is held in cash on the balance sheet, and shares trade at ~12x this year’s Adjusted EBITDA despite guidance for growth well past 100%. The stock is valued at less than 4x the low end of 2027 EBITDA targets, and those don’t include any category expansion beyond the current focus on eggs (with modest revenue from dairy as well).

There are risks. The egg market is volatile, and even in pasture-raised still somewhat commoditized. Gross margin expansion (from a current 31% to 35%-plus) is a pillar of the 2027 target, and that expansion might be tough to generate for a company that’s mostly a middleman. Door count growth probably slows as well.

Still, there’s a solid long-term case here. And free eggs don’t hurt.

Real Good Foods Is Giving Money Away

What appears to be far and away the most aggressive shareholder benefit program comes from Real Good Food, a manufacturer of gluten- and grain-free frozen foods. RGF closed Monday at just $1.88, but the company still appears to offer huge rewards across four levels:

• 100 shares ($188 investment): $50 digital gift card to RGF, $25 Visa gift card

• 400 shares ($752): $50 digital gift card, $100 Visa gift card

• 1,000 shares ($1,880): $100 digital gift card, $100 in the shareholder store, $250 Visa gift card

• 3,750 shares ($7,050): $200 in shareholder store, $500 Visa gift card, monthly “VIP care package”

To be clear, the offers aren’t cumulative (shareholders only get one), but they’re still quite significant. At the highest level, investors instantly get back more than 7% of their capital; at the lowest, returns are double-digits in cash and over 25% in terms of product.

The offer is only available through Tiicker (Stockperks says it is out of stock). And with RGF stock plummeting to an all-time low, and the market cap at just $21 million, it may not last much longer. As with the travel players, there’s also the very real risk that short-term losses could eat up any gift card benefits:

source: Koyfin; year-to-date chart

Still, getting back more than 20% of your initial investment looks awfully promising — particularly with the ability to exit the stock in only a week. The biggest catch might be that the very existence of such a lucrative offer raises real questions about owning RGF in the first place.

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As of this writing, Vince Martin is long Delek, Reed’s, and Vital Farms.

Stocks mentioned: CCL 0.00%↑, CODX 0.00%↑, COF 0.00%↑, COLM 0.00%↑, CUK 0.00%↑, DK 0.00%↑, EXPE 0.00%↑, IHG 0.00%↑, IRBT 0.00%↑, ISPO 0.00%↑, JWN 0.00%↑, MTTR 0.00%↑, NCLH 0.00%↑, RCL 0.00%↑, RGF 0.00%↑, SBUX 0.00%↑, SFIX 0.00%↑, SLNA 0.00%↑, VITL 0.00%↑, WVVI 0.00%↑, WWW 0.00%↑

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1. Technically, investors might be liable for tax here; we haven’t checked with the company. But we’d be surprised if the Internal Revenue Service cracked down (get it?).