Know Who Knocketh

Groucho Marx

Groucho Marx (Photo credit: Paste Magazine)

We all are acutely aware that making money in this market is proving difficult, even for the most astute investors.  Everyone is elbowing their way through the crowds and looking to get a leg up on the competition.  A tour of investors to a client’s headquarters last week proved to me how things are getting a little out of hand.
 
Working closely with a reputable brokerage firm, we had planned for a group of about 30 investors to visit a client’s offices to meet with management and get a tour.  As the date drew near, we were informed that we could not have the list of attendees.  What?  Some of the attendees did not want anyone to know they would be there.  Really? This was communicated directly to the sales team that informed the higher echelon of the brokerage firm who laid down the law.  Really?  You have got to be kidding me.
 
Who has an event of this size and without knowing who is attending?  For that matter, who would meet with anyone without knowing who they are, why they are there, what they are looking for, and why this meeting could be of any value?  It’s tough enough to know whether the hedge fund manager sitting across from you is short or long on your stock, and now he/she doesn’t want to be identified?  Should we use a confessional to conduct investor meetings going forward?
 
Barring everyone is wearing Groucho glasses to hide their identities (which would just be funny), this simply is not acceptable.  Just as any investor wants a management team to be candid, clear and operate with the highest level of integrity, the converse also is true.  If an investor wants to skulk around to gain an edge on their own time, fine.  But if you request to meet with a management team, it only stands to reason that we know your name and where you work, at the very least.  Really.

 

PondelWilkinson, investor@pondel.com
 
 

Say It Ain’t So

Although news outlets recently reported that the recession officially ended in June 2009, the message does not seem to have made much difference to those living on the front lines in the business community.  Borrowing is still difficult and unemployment remains high.
 
The latest quarterly Duke University/CFO Magazine Global Business Outlook Survey shows that only 14% of U.S. CFOs, out of 937 surveyed in early September, are more optimistic about the economy than they were last quarter.  A staggering 57% noted they were less optimistic.
 
Main Street isn’t faring much better.  A new poll from CNN/Opinion Research Corporation found that a nearly three-quarters of Americans believe the economy is still in a recession.
 
What is it going to take for the pessimism to abate?  I’m not sure anyone knows the answer to that question but when housing-related industries begin to rebound, businesses resume hiring to meet growth expectations and consumers start spending again in earnest, we might hear some real-world positive data about the state of the economy.

 

Laurie Berman, lberman@pondel.com
 
 

‘Social Media’ are Two Words IROs Shouldn’t Fear

Social media probably are the two most revered words in investor relations today.  Although the medium is no stranger to consumer brands, social media is just now being tested by corporate communications departments as they look to engage investor audiences.
 
SEC rules post-financial regulation reform have created an onslaught of new communication channels for companies, social media being high on the list.   These new channels provide a robust platform for companies to listen, share and engage with multiple audiences like never before.
 
Most publicly traded companies can benefit from some type of social media engagement.  Consumer and investor audiences are being influenced by social networks and the blogosphere.   The trick is adopting a strategy that resonates with an organization’s key audiences and objectives.
 
Programs can be large or small in scope, but never implemented because of the status quo.  A good rule of thumb is to determine if social media fits into a company’s communications objectives, rather than how the communications objectives fit into social media.
 
Adopting effective social media strategies can be quite daunting, since these platforms are “new” to investor relations audiences.  But companies cannot ignore the influence of blog posts, tweets, video and conversation threads.  Engaging in these new media builds social capital, a valuable network that ultimately can enhance reputation, not to mention shareholder value.

 

George Medici, gmedici@pondel.com
 
 

The Value of a Good Memo

Yesterday, Valeant Pharmaceuticals (NYSE:VRX) filed an 8-K that included a copy of an internal e-mail from Mike Pearson, CEO, to all employees of both Valeant and its merger partner, Biovail (NYSE:BVF).  I thought the five-page memo was thoughtful and chock full of information that should help employees keep abreast of where things stand with the merger.  It was honest and forthright, and I found it refreshing. 
 
Too often senior management shies away from having direct communication with his or her employees, and it confounds me when this happens during a company’s most important transformational event.  I doubt whether this missive will eliminate the chatter at the water cooler (do these still exist?), but at least if there are rants they will be more informed.
 
The filing of the 8-K also informed investors (as it was meant to), and revealed a few more details about some of the expected merger synergies.  This then prompted analysts to issue reports highlighting these updates (all of which seemed to be lauded).  All told, an elegant way to disseminate “news” to employees and the Street, versus impersonal highlights spelled out in a public news release.  But even if you don’t go all out like Valeant did and file an 8-K, do continue to regularly communicate with your employees – just don’t include any new material bits.

 

PondelWilkinson, investor@pondel.com