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
 
 

On the Road (Show) Again

Two Ideas for Taking a Food Break in NYC without Busting Your Expense Account
 
You can release endorphins with top-rated Latin jazz—hot salsa (not the kind you eat), son and boleros—and eat well at the same time for less than $20, five days a week at Havana Central, 151 West 46th street.
 
OK, so I am a little crazier than most for this kind of music, triggered about five years ago by a trip to Havana.  But it’s a cool place with great food, and it takes your mind totally off work. Best yet, even though you may not see Poncho Sanchez, Chucho Valdez or Arturo Sandoval, the talent is awesome, and there’s never a cover charge. You can walk there from most parts of Midtown Manhattan. The general manager is Phil Colbaugh, 212 398-7440. Reservations are not usually necessary.
 
This next one—pure, unadulterated, totally authentic Greek, Taverna Kyclades, 3307 Ditmars Blvd., Astoria, Queens—requires about a 30-minute (could be a little longer, but well worth it) cab ride or subway.  But get ready for a true culinary feast, where the average entrée with appetizer, a glass of wine at a neat little bar down the street, and dessert, is $14. Trust me, this place is no dive. You won’t see tourists, you will hear Greek spoken, and you will make a return trip.
 
About that wine…there is usually a 30 to 60-minute wait to get seated at the restaurant. So former basketball player-turned-restaurateur Adrian Skenderi (718-545-8666) made a deal with a bar-owner friend a half a block away to provide a free glass of wine or hard drink absolutely free while waiting. When you sign in at the restaurant, you and your guests are given a coupon for the free booze and the name of the bar. Leave a tip, of course. You can get essentially the same meal, sans the wine, at Avra on 49th just east of Lex for about $60+ per person, but you will not likely hear many people speaking Greek.

 

Roger Pondel, rpondel@pondel.com
 
 

Environmental, Social and Governance Issues

Join NIRI LA for a free webinar Tuesday, October 6 at 1 p.m. PDT to discuss how companies are prioritizing sustainability, environmental and social issues.  An increasing number of companies are embracing environmental, social and governance (ESG) issues to meet the expectations of investors and possible SEC mandates.  Find out what you need to know about upcoming requirements and hear from top experts in the field who will provide you with practical and useful insights.
 
 

Wall Street is Still Listening

It was not exactly the most fun time to be on an informational road show with a small cap company. But it was well worthwhile.
 
Yes, the moods were glum. One portfolio manager talked about bread lines in our future. Another said he hasn’t seen anything like this in 35 years. But most were doing their jobs as usual, visiting with management teams, writing research notes and hoping for better times. They all thanked us for coming, and therein is the real benefit of getting out there during these frightening times.
 
While no company has been immune to the market sell-off, regardless of earnings performance, portfolio managers have choices of which stocks to sell, which to hold, and even whether to step up to the plate and do some buying.  Likewise, sell-side analysts are still making all kinds of recommendations.
 
What I learned this week may seem like common sense, but here goes:
 

  1. Stay visible. The company that hides during these times may well be the first forgotten about by investors and analysts.  And may well be among the first to be sold. Staying visible provides tangible benefits.
  2. Re-visit messaging. Cash, cash, cash are three critical words to emphasize if a company has any. Investors are looking hard at balance sheets. Conservative management styles are in vogue, even for classic growth companies.
  3. Concentrate on quality. Yes, investors and analysts are looking for solid stocks to buy—if not today, they want to be ready when that right time comes.  But carefully assess the potential holders with whom you visit. Better to do four or five meetings with quality investors in a day, than squeeze in six or seven and risk a potential short seller or short term, fast-money investor.

 
In four days of meetings, both group sessions and one-on-ones, it was strange to see that all the guys wore ties.  I just took mine off.  TGIF never sounded so good.

 

Roger Pondel, President, rpondel@pondel.com
 
 

Grounded Accommodations

If your travels (business or otherwise) happen to take you to Stockholm in the near future, consider this new and interesting place to stay.  It’s very convenient to the airport.  In fact, it’s in the airport…in an old Boeing 747.
 

Jumbo

Jumbo Hostel accommodations can even be found in the cockpit. Or have lunch in the body in a retro cafe!

Swedish businessman and entrepreneur Oscar Dios is converting a grounded 747 into a 25-room hotel called Jumbo Hostel, according to CNN.  The plane, which used to carry more than 350 passengers, is being renovated to provide accommodations for up to 85 guests. Jumbo Hostel is scheduled to open in December 2008.
 
A basic room at the hotel will cost approximately $150 per night.  At only 65 square feet it is said to be large enough for three adults (perhaps when the bed is stored in the upright position). For about $700 per night, you can book the top deck which includes the cockpit suite, a private bathroom and panoramic views of the airport’s takeoffs and landings.
 
Even if you don’t want to spend the night on board you can visit the café suite for a couple of hours for $35 (a bargain considering you can walk out onto the plane’s wing to view the airport from a unique vantage point).  Unfortunately, there’s no business center!

 

Laurie Berman, Senior Vice President, lberman@pondel.com
 
 

Green Means Stop

As in, head for the hills.
 
On a recent roadshow in London, a midday meeting with a prominent investment banker provided insights into some of the lesser known indexes being adopted to better understand the economy’s overall health.
 
As explained to us, the newly conceived Green Light Index leverages insights gained from the number of taxi cabs available for hire during rush hour. Simply put, the more green displayed on cab roofs during peak hours, the more belt-tightening by individuals and, thus, the more bearish the overall sentiment. If you are now seeing a lot of green, consider that your portfolio might be seeing a lot of red. And if it is raining, fuget about it.
 
Our banker friend also shared the Crane Index with us. His theory goes something like this: If you see a sea of building cranes when surveying the skyline, watch out. He postulated that by the time big real estate plans are put into action, the dizzying market heights that spurred such enthusiasm might be over. A recession may be imminent. “Real estate never gets it right,” he growled. This might tick off some moguls out there but it’s something to consider.
 
So if the daily machinations of the stock market leave you wondering what’s really going on, survey your local landscape for some additional guidance.

 

PondelWilkinson, investor@pondel.com
 
 

Whose Line is it Anyway?

I was quite surprised by a new set up at LAX when traveling to New York for a meeting last week.  Signs at the security checkpoint asked me to choose a line depending on my travel status.  Was I an expert traveler, a casual traveler or a traveler with a family?
 
Clearly, as it was 5 a.m. and my family was still at home tucked in bed, I could tick off family traveler.  But, since I was going to New York for both a business meeting and for a personal commitment, I had trouble deciding which “label” fit best.
 
A recent Wall Street Journal article confirmed that I am not alone in my confusion.  Many people find the signs unclear and are not sure if choosing the correct line is mandatory or voluntary.  However, the Transportation Security Administration says the program is working better than originally anticipated and that traveler aggravation is being minimized.  Many people like the new system and believe they are getting through security quicker and with less hassle.
 
According to the TSA, the “Black Diamond” program, named for the ski-resort term for expert trails, is aimed at improving security by creating a less stressful experience.  The program, which is currently in operation in a handful of airports today, is slated for expansion to additional airports in the near future.
 
So, which line did I ultimately choose?  Given my familiarity with security procedures and having mastered the art of taking my jacket and shoes off while removing my laptop, I decided I was indeed an expert traveler.  It didn’t speed my wait time any, but I suppose during peak travel hours it’s a plan that just might work.

 

Laurie Berman, Senior Vice President, lberman@pondel.com
 
 

Roth ‘n Roll

I just returned from the 20th Annual Roth Conference in Dana Point, Calif. All of the usual suspects were there toting their Roth beach bags around like tourists in search of a secluded cove, or in this case, a quiet table to talk shop.
 
Not sure if Roth put something in the water, but everyone seemed excessively happy. I looked around the room during our one-on-one session and noticed a sea of smiles meeting and greeting and eating.
 
The stock market is down, smelling salts of a recession are in the air, and the Fed keeps cranking out weak data.  Am I missing something? Is there a Prozac vendor nearby?
 
I realize that nearly a third of the attendees hail from the East Coast, and popping pastries at the Ritz-Carlton Dana Point in mid-February is a lot more appealing than popping antacid while knee deep in traffic on the Major Deegan. But investors and presenting companies were practically gleeful at this year’s Roth conference.
 
The fact is Roth knows how to throw a good party. Our buy-side meetings were with top-notch firms. The evening entertainment included In-N-Out Burger and alt-rockers Good Charlotte. And the Ritz-Carlton box lunch included a cookie that was moist and, well, delicious.
 
I suppose my only complaint is the noise level that emanated from neighboring tables during our one-on-one meetings. That, of course, and the distracting view of the handful of surfers and the Pacific Ocean that serve as a backdrop from nearly every vantage point at the hotel. 

 

Evan Pondel, Senior Associate, epondel@pondel.com
 
 

Wall Street’s Dress Code

From Brooks Brother’s and Armani pin stripes to those who found True Religion, it’s hard to tell  whether Wall Street’s dress code is changing again. Along the trail of PW’s last 2007 roadshow—this one exclusively with institutional investors—business casual still rules. 
 
While observing 23 portfolio managers and buy-side analysts from firms as large as $800 billion under management in Boston (guess which one) and as small as $50 million:  five, equal to 21.7%, were dressed in denim, including the only female; 11, or 47.8%, donned slacks and open collar shirts; and seven, or 30.5 %, were of the old school vintage, wearing ties.  Of the presenting executives, 100% wore suits and ties.
 
Other roadshow observations … 
 
Less than two hours from bustling Manhattan, money managers abound.  In a day, we visited firms in Greenville, DE, just outside of Wilmington, plus West Conshohocken, Malvern, Berwyn and Radnor, PA, all within a stone’s throw of Philadelphia.
 
And what to eat? Picks from the trip: Oceanairre in Philadelphia; Luca in the North End of Boston; Town in the always hip Chambers Hotel on West 56th Street in Manhattan. Try the lamb.

 

Roger Pondel, President, rpondel@pondel.com