Saturday Mornings, a Frothy Latte and The Wall Street Journal

Ever since The Wall Street Journal started publishing on Saturdays, I have more-than-ever appreciated the print edition, relaxing unrushed with a latte to read just about every story.

"The Cure for Decision Fatigue,” a Saturday Essay in the WSJ.“

“The Cure for Decision Fatigue,” a Saturday Essay in the WSJ.

Aside from major news, which all of us see from many media, it seems like on Saturdays, the Journal always publishes some interesting pieces that go largely unnoticed by other publications. This past weekend was no exception.

There was a near full-page feature about where to go for the best ice cream sundae in New York City (the Brooklyn Farmacy & Soda Fountain); a story about walking in Los Angeles’ new downtown Arts District; a column about the rise of the “polypill,” an all-in-one capsule that will lower your cholesterol, take down your blood pressure and reduce your blood sugar at the same time; and a practical treatise touting the benefits of wearing seersucker swimming shorts.

With my business hat on, however, the one that caught my eye was the “Intelligent Investor” column by Jason Zweig. I had spoken with Jason during the week as he was researching his column, which focused on how, over the recent years, America’s individual shareholders have essentially disappeared from view.

Jason pointed to an antiquated SEC rule, dating back to 1934, stating that if a company has fewer than 300 shareholders, it can deregister and “go dark,” saving the company certain costs and also eliminating the communications transparency that shareholders, and I and my colleagues as professional corporate communicators, all hold near and dear.

In part because of technology, most investors for many years have been buying shares in electronic form. They hold those shares in brokerage accounts, rather than seeking share certificates from the issuers. The actual record holders in essence have become the brokerages. One record holder possibly could represent thousands of individual investors.

The practicality of the brokerages forwarding to their customers all the news that an issuer distributes is just about nil. Moreover, if a company goes dark, requirements for widely issuing any news is significantly reduced. As is the point of Jason’s column, if an issuer wants to tune out almost completely and deregister, it would be pretty easy. That’s a frightening thought that over time could significantly diminish valuation for all holders.

Fortunately, most of the companies going dark are not main stream, and in our observation, are typically quite small and usually not of the highest investment grade. Perhaps, however, it is time for the SEC to look at this rule and increase that 300 minimum number for the benefit of all shareholders.

Nice piece, Jason. Hopefully you haven’t given any ideas to too many issuers! As to other stories in Saturday’s edition, there also was an interesting one headlined, “The Cure for Decision Fatigue.” Perhaps I should have had a cappuccino instead of a latte?

—Roger Pondel, rpondel@pondel.com

Gearing Up for the IR Community’s Largest Gathering

On Sunday, I’ll be heading to the 2016 NIRI annual conference in San Diego to learn about the latest developments in our industry, hear informative (and I hope entertaining) speakers and meet like-minded people to gather intelligence about what makes a successful IR program.

The sessions I’m most interested in follow:

  • Overview of Key Corporate Governance and Regulatory Issues – And What You Need to Know to Keep Activism at Bay. Those who follow this blog know that we’ve written about activism in the past, including this post about the rising tide of activism. Although it was written nearly eight months ago, the message is still relevant today. A recent Wall Street Journal article reported on the creation of the Council for Investor Rights and Corporate Accountability, or Circa, which is the “first coordinated effort by activists to make their case to lawmakers and the American public that their investment strategy helps, rather than harms, companies and the U.S. economy.” There are some major heavyweights on the Council, including Carl Icahn and Bill Ackman.
  • Breaking through the Noise: Latest Trends in Quarterly Reporting. Without trying to give away my age, I have now been involved in nearly 90 quarterly reporting cycles. If I add the fact that for the majority of that time I’ve been at an agency serving a multitude of clients, I bet I’ve written more than 500 earnings releases and conference call scripts (kind of crazy seeing that in black and white). Oftentimes, it’s hard to get excited about a process that generally lacks creativity in how the news is delivered. Recently, however, we’ve seen video earnings calls from Restoration Hardware, use of social media as a primary disclosure outlet from Netflix and formal remarks being posted on IR websites to allow for Q&A-only calls.
  • Short Attacks: The New ‘Wolf Pack’: Best Practices for Preparing and Defending Against a Short Attack. I’ve been intimately involved in an organized short attack this year, and it’s anything but fun. A recent Supreme Court Ruling, as reported by Bloomberg, could make naked short selling much more difficult for those trying to manipulate the stock market, while Carson Block, an activist short seller, told Business Insider, “I think we’re helping people.”

There will be lots more to see, hear and explore. If you’ll be in San Diego next week, look for me so we can exchange war stories.

– Laurie Berman, lberman@pondel.com