Tales from Wall Street: Dealing with the Angry Investor

It’s been a very rough last few days on Wall Street. After nearly 20 years of doing investor relations, I’ve learned to weather the storm when it comes to crashes, corrections and the impact of what the Fed says (or doesn’t say) on any given day.

That said, investing is not just an intellectual exercise, but an emotional one, too. Whether it’s the Dow dropping 600 points, or less than stellar earnings results, chances are that if you are a public company CEO, CFO or investor relations professional, you’ve dealt with an upset investor.

Following are my dos and don’ts for dealing with an angry or upset investor:

Do actively listen. The best way to do this is to take good notes on what the investor is saying.

Do show empathy. Acknowledge what the investor is saying (and respectfully ask for clarification when needed). Treat every investor with genuine respect.

Do be calm, matter of fact and professional. Dealing with a professional or personal investor’s investments can be highly emotional. Be conscious of your body language and tone of voice. If an investor is profane or abusive, don’t respond in kind. Instead, remove yourself from the situation if you feel tempted to “fight back.”

Do correct misinformation and take the emotion out of the exchange. Avoid attacking the investor’s emotions or feelings about a stock when addressing any misinformation they’ve brought up. Your job is not to change their mind about how they feel about a stock – but to present them with factual information.

Don’t respond with sarcasm. While it may be OK in context among friends, it has the potential to be misinterpreted in a written conference call transcript or when an investor posts what you said on a message board.

Don’t get defensive or try to “solve” the issue right away. Wait for the cue or ask the investor for permission to ask questions or respond.

Don’t say “The stock is turning around or it’s going to go up soon.”

Don’t, under any circumstances, try to advise the investor on whether or not they should keep or sell a stock. If the investor asks you, “What would you do?” the appropriate response is “It would be inappropriate for me to advise you on whether you should buy or sell your stock.”

Do talk about your company’s “investor” story. Each company has its own unique investor thesis. Emphasize the fundamentals of your company’s story.

Do be proactive in your response, but don’t promise anything you can’t deliver. If you don’t know the answer, don’t make one up. There is nothing wrong with saying “When is a good time for me to get back to you on this issue?”

Do keep your answers short and to the point. It can be tempting to try to add additional assurances or information to your response, but when dealing with public company information issues – the best response is to stick with information already public.

– E.E. Wang, ewang@pondel.com

Tales from Wall Street: Surviving Earnings Season

If a non-deal road show is a planned marathon made up of many, many sprints – earnings season is like a sprint that feels like a very long marathon.

At the risk of sounding a bit like a New Age-y Californian, here are the tips for how I survive earnings season:

  1. Stay Fueled. For you, it may be a Starbucks triple espresso, but for me, it’s my morning smoothie. My personal favorite recipe has 2 cups of kale or spinach, ½ a red grapefruit, ½ an orange, 3-4 strawberries, a few slices of Persian cucumber, a handful of raspberries, 1-2 tsps of raw maca powder (for extra pep in my step) and one tablespoon of chia seeds for protein.
  2. Find your Earnings Season touchstone to maintain your mojo. The most frustrating part of any earnings season is the “middle.” It could be the script’s not done, your team’s onto the XXth revision, you just found out that Yahoo’s printed the wrong analyst estimate, or you’re simply wondering how you will get everything done by Earnings Day.

Maintaining your mojo can be hard but incorporating fun little rituals and having a touchstone activity, can help refocus and reinvigorate your Earnings Season ninja skills. For me, it can be as simple as taking a moment to call or text my hubby* with a quick hello or performing freeway karaoke to my favorite IR songs to remind me that there is life outside of earnings season.

  1. Get Some Good Sleep. It can be hard getting a full night’s sleep when your mind is filled with anticipation for that upcoming earnings call. But as anyone will tell you, a good night’s sleep can do wonders for making sure you are feeling your best and on top of your game come Earnings Day. Research shows that it’s not about the hours you get, but the quality and depth.  Here’s my favorite sweet treat recipe for getting a good night’s sleep the evening before Earnings Day:

1 cup almond milk

1/2 a frozen banana

2/3 cup frozen bing cherries (pitted)

1/4 tsp nutmeg

1/2 tbsp. of raw cacao nibs

1 tbsp honey

Toss all ingredients in blender. Mix until smooth.

  1. Put Together a Fun Earnings Day Ritual. It might be having your team wear a certain color on earnings day or going out for a quick bite at a favorite local hangout, but I always find that sharing a simple ritual or tradition before the conference call is a fun way to make sure that your team gets some fresh energy before tackling that last stretch of your Earnings “sprint.”

You’ve researched, written, edited, rehearsed and planned for this day. Now your investors get to hear about your results for the first time. Good luck!

*(My hubby has been my rock through nearly 50 earnings seasons to date and despite his own busy work schedule, still has managed to send me a quick “good luck and I love you!” text just before each earnings call. Thanks hon! This one’s for you – and all of the understanding spouses and significant others who support the CEOs, CFOs and IR professionals during and outside of earnings season.)

– E.E. Wang, ewang@pondel.com

Silicon Valley – The HBO Show (not the place)

SiliconWhile binge watching HBO’s Silicon Valley last weekend, I was thinking about whether the show actually mirrors reality, or if it’s mostly a work of fiction. Since I’ve never started up a tech company, I don’t have an opinion on how real that aspect of the show is, but since I do spend my days in the worlds of finance and communications, and I did work for a tech company that was incubated, I believe that the show’s conversations about venture capital, fund raising and public perception are pretty on the money (pun intended).

So, I thought a blog about Silicon Valley (the show) and its ties to business and celebrity of Silicon Valley (the place) might be interesting. But when I sat down to actually write something, I couldn’t quite figure out how to relate what I’ve seen on the small screen to my life in investor relations. That got me pulling up a search engine (one based in Silicon Valley, of course) on the off chance there might be something that would help stir my creative side. Much to my surprise, when I typed “HBO’s Silicon Valley and business” into the search bar, I got 421,000 results. Titles like, “3 Management Lessons from HBO’s Silicon Valley,” “Business Lessons from HBO’s Silicon Valley” and “INCUBATE THIS: Trade Secrets Lessons from HBO’s Silicon Valley” made me realize that this is a topic that has been done before.

At the risk of being somewhat of a copycat, here’s a quick summary of the lessons a lot of bloggers and journalists want to you take away from the show:

  • From Hivewyre: Have a work/life balance. “By taking the occasional break (or, gasp— even a vacation) you’re doing yourself and the company some good. Doing so means recharging your batteries, clearing your head, and coming back ready to kill it!”
  • From InsideCounsel: Protect your IP. “It is important for these companies to invest in protecting its own IP so that it can use that IP to defend itself if necessary.”
  • From WeberShandwick: Clear messaging is essential. “Especially in deep tech, it’s easy to get caught up in the specs and techs of a product. Our challenge is to elevate the messaging to something meaningful, but not generic. Instead of “making the world a better place,” can you get more specific?”
  • From Forbes: Do your homework. “Startups need to have the basics buttoned up long before raising money.”
  • From The Business Journals: Assembling a board is not an easy task. “Good board members can help young companies gain credibility and open doors. Board seats are valued rewards for key investors and personnel. But they also carry tremendous responsibility. Board members must place the company’s interests ahead of their own. And for every new board seat created, the value of every other board seat is diminished. The lesson: board positions matter and should be given out very carefully.”

If you haven’t given the show a chance, check it out. It’s politically incorrect and foul-mouthed, but an incredibly funny look at the culture of tech start-ups, and a fountain of good information…for what NOT to do!

— Laurie Berman, lberman@pondel.com

Sell-Side Insights and Wisdom

Recently, our firm sat down with the director of research of a boutique investment bank that provides high-quality research primarily on small-cap stocks. Throughout the course of our conversation, Mr. X (name redacted to protect the innocent!) provided several words of wisdom for investor relations professionals and public companies, so I thought I’d share them here. My thoughts are noted in italics.

  • Don’t add an analyst/portfolio manager/investment professional to your email distribution list unless said analyst/portfolio manager/investment professional has asked to be added. Nobody likes spam.
  • Respond to inbound inquiries in a timely manner. This may seem like “no duh” advice, but you’d be surprised at how many people don’t follow it. The rule of thumb seems to be 24 hours, but I try to respond before the end of the same business day.
  • Keep analysts updated with information that management has shared during investor conferences and non-deal roadshows, even if your team travels with an analyst from another firm. It goes without saying (although I’m going to say it anyway) that you should never keep analysts, or anyone else for that matter, updated on previously undisclosed material information.
  • Guidance is helpful in that it provides a framework for reported results. Anything is fine, including expected ranges in dollars, anticipated growth rates and ongoing trends. We didn’t discuss annual versus quarterly guidance, but a bit of research will show that there is little consensus (pun intended) on guidance practices.
  • Many investment professionals have compliance restrictions on how they interact with social media. While this may be true at the office, investment professionals are people too, and can access social media to their heart’s content at home. So don’t stop using social media as a vehicle for dissemination, but understand that you likely need to keep using more traditional channels as well.
  • Don’t respond via press release to Seeking Alpha articles. We all know that content on Seeking Alpha has the power to move a stock in either direction, but Mr. X believes responding publicly via press release looks defensive. Each situation is different, but in general, I tend to agree.

— Laurie Berman, lberman@pondel.com

Tales from Wall Street: The NDR Warrior’s Toolkit

handbag

The mystery behind what’s in an IR practitioner’s workbag is revealed.

Anyone who has ever been on a non-deal road show or done an investor conference will tell you…it’s not for the faint of heart. I describe it as a planned marathon made up of many, many sprints. Meetings with existing investors, new investors, sell-side analysts, investment bankers – a typical day can start as early as 7 a.m. and run as late as 9 or 10 p.m. (depending upon when you wrap up that last dinner).

My job on these trips is to make sure that my management is on top of their game throughout the day: from making sure they have the right background information on the people they’re meeting with to making introductions and helping facilitate the discussion, and finally, helping them stay on schedule and as energetic about their story at 4 p.m. as they were at 8 a.m.

Just as a builder wouldn’t go to a construction site without his toolbox, my handbag is my silent partner in making sure the day is a success. It’s more than just a place to hold my wallet, ID, business cards, lipstick and cell phone – it’s my NDR toolkit.

So what’s in it?

  • My Surface Pro 3 – it can be a prop-up tablet for when we do a 1×1 (or 1×2 or 1×3) meeting or a fully functioning laptop that management and I can use to do work in between meetings
  • Hard copy of our schedule with background info on our meetings
  • Hard copy of last conference call transcript/earnings release
  • A bound hard copy of the investor presentation
  • Notebook, pen and mechanical pencil
  • Must have apps on my phone:
    o   Google Maps
    o   Waze (much better for managing through traffic)
    o   Starbucks (so I can make sure that my management team is ready to go for that 8 a.m. meeting or re-energized at midafternoon)
    o   Yelp! (to find good eats on the fly)
  • Electronics mini bag contents:
    o   Two UBS flash drives with copies of the investor presentation (just in case that AV guy at the conference walks away with one)
    o   Chargers for my Surface Pro 3 and cell phone
    o   Back up battery charger (just in case an outlet is nowhere to be found)
    o   Screen cleaner and microfiber cloth
  • Small Ziplock bag with:
    o   Altoid mints, Orbit peppermint gum – for eliminating coffee or post-lunch breath
    o   Lozenges – to make sure my CEO or CFO’s throat stays strong throughout the day
    o   A few energy bars (just in case we miss lunch and need to eat on the run)
  • Metro card (when traffic’s tied up, there’s no better way to travel in NYC). In San Francisco, it’s a BART card.
  • Antibacterial soap, hand lotion
  • Colgate Wisps
  • Hairbands (perfect for keeping my long hair tamed but also for organizing all the business cards I’ve collected)
  • My iPod – so when I’m winding down the day, I can kick back with a chill tune

— E.E. Wang, Wang@pondel.com

Time to Get Your NIRI On

NIRIThe film industry has Sundance, technology has the Consumer Electronics Show, and the world of investor relations has the NIRI Annual Conference.  More than 1,000 IR practitioners attend what is considered the preeminent IR event of the year, and 2015 will be no exception with a dynamic lineup of panelists, myriad stimulating topics, and the rare opportunity to sing “Kumbaya” with fellow IR folks.

PondelWilkinson will be at the conference not only as an attendee, but as an active participant.  Evan Pondel will serve as a panelist for the workshop session entitled “Social media: Friend or Foe for Reaching Target Audiences?”  Joining him is Beth Blankespoor, professor of accounting at Stanford University, Nils Paellmann, head of investor relations at T-Mobile, and Serena Ehrlich, director of social and evolving media at BusinessWire.

Evan will also be moderating a panel entitled “Engaging Financial Media, Trade Publications, and Bloggers to Enhance an Investor Relations Program.”  Joining Evan is Peter Frost, business reporter from Crain’s, Paul Hart, editor of Midstream Business magazine, and Guy Cohen, director at Seeking Alpha.

The conference runs June 14 to June 17 at the Hyatt Regency in Chicago.  For more information, please visit www.niri.org.

Observations of a Knock-out Investor Conference

Three people got punched in the face and knocked out at the 16th Annual B. Riley & Co. Investor Conference, held last week at a Hollywood hotel, directly next door to where the final episode of American Idol was being recorded at the same time.

It was not the kind of night-time brawl to which investors are accustomed. And fortunately, it was not investors who felt the sting of those punches.

Rather, in partnership with the Sugar Ray Leonard Foundation, B. Riley hosted the 6th Annual “Big Fighters, Big Cause” charity boxing night in conjunction with the conference. The event supports the Foundation’s mission to raise funds for research and awareness to cure Type 1 diabetes and to help children live healthier lives.

For an organization that is part of a fraternity generally known more for greed and making money for itself and its clients, it was refreshingly cool to be part of this invitation-only charity event, that featured food by Wolfgang Puck, an open bar, a world class auction of iconic memorabilia, and a rich environment for business networking.

As for the day-time part of the conference…it was pretty cool as well. More than 200 emerging and middle market companies from a wide range of industries presented to packed rooms of institutional investors, who journeyed to Hollywood from all parts of the United States.

Attendees were treated to chair massages with short lines, fun tchotchkes from sponsors— including a wide array of pens, flashlights, chocolate, ginger candy, key chains, cute little footballs and many glass bowls in which to deposit business cards, with chances to win even bigger items. As well, there was the option of skipping a presentation or two and sashaying down Hollywood Boulevard to gaze at the stars.

There were more men wearing ties than one would expect. There were more people showing off their new Apple watches than one would expect. And just as one would expect, there were many great presentations, and, of course, some boring ones.

It was a classy conference…one could say a knock-out conference in all respects, in which the presenting companies, the investors, the sponsors, and best of all, kids with Type 1 diabetes, all benefitted.

– Roger Pondel, rpondel@pondel.com

Party in Omaha

Berky BoxToday, I’m taking a look at the CenturyLink Center in Omaha. Home to basketball and hockey games, rock concerts, a convention center, and yes, Berkshire Hathaway’s annual meeting.  The Arena holds more than 18,000 screaming fans, or, in this case, shareholders. Estimates put visitors to the 2015 annual meeting at about 40,000.

Most annual shareholder meetings amount to nothing more than required legal statements, perhaps a company presentation, and if you’re lucky, refreshments. Berkshire Hathaway takes annual meetings to a whole new level. The opportunity to buy Berkshire-themed trinkets from subsidiaries Heinz, Fruit of the Loom and Oriental Trading (including a set of Warren Buffet and Charlie Munger rubber duckies for $5 and Berky Boxers, which CNN proclaim a long-time best seller)…check. The opportunity to eat a piece of a gigantic ice cream cake created by Dairy Queen in celebration of Warren Buffet’s 50th anniversary of taking control of Berkshire Hathaway…check. The chance to run a 5k among other Berkshire investors…check. There is even a detailed Visitor’s Guide outlining the many activities in and around the shareholder meeting. The guide provides information on “seat saving,” “microphone manners,” and the annual “Newspaper Tossing Challenge” in which Buffet challenges anyone to a 35-foot World-Herald paper tossing contest. If any participant lands a paper closer to the doorstep of the Clayton Home, that participant will receive a Dilly Bar. What’s a Dilly Bar anyway? Sounds more like a party, and why not with thousands of shareholders and a Chairman who calls the annual meeting a “Woodstock for Capitalists.”

Was any actual business conducted at the Berkshire Hathaway annual meeting? Absolutely. Although most investors unequivocally love him, the questions were not the softballs you might expect. Among the things he and Munger were asked, according to MarketWatch, during a nearly six hour Q&A session, included refuting accusations that Berkshire subsidiary Clayton Homes engages in predatory lending practices, whether IBM is a “cigar-butt” stock, referring to a company that is “a good value investment, but with only a couple of puffs left,” and whether Coke’s competitive advantage is narrowing. When talking about changing consumer preferences for food and drink, the 84-year-old Buffet commented, “If I lived my whole life eating broccoli and Brussels sprouts, I probably wouldn’t live as long.”

While I certainly don’t think many, if any, companies should follow Berkshire’s lead when planning their annual meeting, there are a few lessons to be learned. Be shareholder friendly. Communicate in a style that everyone will understand, and make it easy for investors to access your information, attend your meeting and own your stock. Make your annual meeting worthwhile. While tchotchkes are nice and provide shareholders with a fun reminder of their stock ownership, most would likely prefer an open and honest Q&A with management to help them understand a company’s future plan and how they are going to get there. You don’t need to give them six hours, but you should provide a forum for their questions and commentary.

With annual meeting season upon us, let us know if you’ve been to a great meeting, and also if you’ve seen anything that made you cringe (company names are not required). To Warren Buffet, Charlie Munger and Berkshire Hathaway, I say…party on!

— Laurie Berman, lberman@pondel.com

Up ‘Periscope’

Periscope_033015Twitter’s launch of Periscope, which allows anybody to live stream video from a smartphone to anyone in the world with a simple click of a button, has profound implications for the communications world, creating millions of “on-the-scene reporters” and another medium to engage for the investor relations and public relations industry.  Fittingly, in the announcement of the app, Twitter said, “A picture may be worth a thousand words, but live video can take you someplace and show you around.”

With the ability to instantly notify followers that you’re live, Periscope adds an element that’s been missing with the use of video in IR and PR worlds: immediacy.  Live streaming provides for immediate action in a crisis, while also allowing for greater transparency by going beyond the 140-word character limit of Twitter.  Everything from an earnings conference call to a product announcement can now be broadcast live.

At the same time, it opens up a whole set of risks, including as PR News discusses, a “new chapter for the hot-mic problem,” not to mention a bevy of disclosure issues. Of course, it will take several years before live streaming becomes more commonplace. In the meantime, it makes sense to ponder the possibilities of how it could make your story more compelling.

— Matt Sheldon, msheldon@pondel.com

JPM Post-Mortem

The J.P. Morgan Healthcare Conference in San Francisco is the equivalent of the Super Bowl in the healthcare industry, and last week was no exception, with executives from public and private companies descending on the Bay with such vigor and force that Union Square looked like the trading floor of the AMEX circa 1970.

JPMers taking a break in Union Square.

JPMers taking a break in Union Square.

There are good ways to do “JPM” and bad ways to do “JPM.” I walked more than 14 miles during two days of strategic meetings. Fortunately, I wasn’t wearing new shoes. But that doesn’t mean other JPMers weren’t wearing new shoes, and after witnessing dozens upon dozens of executives resting their sore feet on park benches and even curbside, it got me thinking it might be helpful to pass along a few pieces of advice.

  1. Try to avoid scheduling meetings in lounges. It may sound tempting to sip martinis in a dimly lit basement with red velvet seats and a DJ spinning dubstep, but lounges are exactly what they portend to be, lounges. It is difficult to stay alert when sitting reclined with an alcoholic beverage in hand. If you’re seeking an off-the-beaten-path venue, try a tea house, such as Samovar.
  2. An average hotel room near Union Square will cost north of $500 a night during JPM. Fear not. It’s possible to get a decent room close to the action for $150 a night, which includes a lovely continental breakfast. I’m talking about the Golden Gate Hotel, technically a bed and breakfast, but who cares when you’re saving all that money for your next venture. (Be forewarned, you may have to share a bathroom if your reservation is within a few weeks of the conference.)
  3. Schedule meetings with meals. Between back-to-back strategic meetings and the conference itself, proper nourishment is often lacking. To avoid going comatose, try scheduling breakfast, lunch and dinner meetings.   The Daily Grill and Le Colonial are favorites that serve good food and a wee bit of cache for rubbing shoulders with the who’s who at JPM.
  4. Do not over extend on meetings. Yes, it is tempting to meet with anyone and everyone who wants to meet with you, particularly if you’re at an inflection point with respect to funding, M&A activity or strategic alliances. However, if you stretch yourself too thin, meetings that deserve more attention will soon take on water as attention spans wane. Bottom line: Make sure your schedule takes into account some downtime.
  5. And finally, less is more when it comes to collateral at JPM. Most folks are walking from meeting to meeting every 30 minutes to an hour, which means the less you have to carry, the better. If you are interested in passing along collateral, use it as an opportunity to follow up post-JPM.

— Evan Pondel, epondel@pondel.com