It Was in the Cards

Sometime in late 2006, I was sitting at a blackjack table in Las Vegas listening to the dealer talk about how he had just purchased his fifth home.  My brain screamed out, “Wait a second! Something is just not right here!  I am a senior level executive at a nationally recognized investor relations firm and I definitely cannot afford five homes (in fact, I can barely afford one in Los Angeles).”  While I had no idea what the dealer’s earnings were, I was certain that it couldn’t possibly be high enough to justify five mortgages.  I knew my instinct was right, but what I failed to consider at the time was the unbelievable magnitude and spiraling damages from all of the mortgage lending excesses.
 
Guess the house doesn’t always win.

 

PondelWilkinson, investor@pondel.com
 
 

Decoding Where You Sit

If you sit in the same seat at your regular company staff meetings, you may be interested to know what this says about you and your status.  Researchers have found that people fit into one of seven personality types based on where they sit.  At meetings, typically the boss sits at the head of a rectangular table (often facing the door to see who’s coming before anyone else).  The person sitting to the boss’s right tends to say “yes” to most of the leader’s suggestions.  The person to the left of the boss tends to signal support of the leader, though may slip in an opposing view.  Sitting opposite the leader is usually someone who is argumentative and sitting in the middle is the mediator.  The remaining two personality types include the person sitting at the corner of the table, which may indicate he is trying to hide in the crowd and the person sitting on the side (away from the table) may signal she is taking a “bigger picture” perspective (or just late to the meeting).
 
Where do you sit?

 

PondelWilkinson, investor@pondel.com
 
 

Just Say No

In the mid-1980s, Nancy Reagan introduced a national anti-drug campaign that essentially told kids to “just say no” when asked by a drug dealer whether they would like to partake in drugs.  The problem was that some kids began just saying no when their parents tried to soothe their stomachs with Pepto Bismol and other so called drugs, even though they were not of the mind-altering variety.
 
What an apropos scenario when public companies consider whether to talk to hedge funds.  Should we just say no when fast money tries to communicate with a public company?  Or are we inadvertently warding off potentially loyal investors who may actually help soothe volatility during a rough market?
 
Quite frankly, it is difficult to decipher whether a hedge fund is going to help induce an all-time high in a company’s stock price or whether that high will be short lived.  One rule of thumb is to do a little due diligence on a prospective investor before communicating with them, regardless of whether they make the “shark list.”  Talk to the sell side and arm yourself with as much information as possible.
 
Do not hesitate to ask an investor questions when engaged in conversation.  After all, it signals that you are as much engaged in your story as you are in your investors’.  And that will signal to the Street that no matter what new highs or lows an investor takes your stock, you are not resigned to “just saying no” and blindly warding off medicine that may actually be good for a company’s stock valuation.

 

Evan Pondel, Vice President, epondel@pondel.com
 
 

Eye of the Storm

A friend of mine recently curated the “Eye of the Storm” photography exhibit at the Reform Gallery in West Hollywood, featuring images from enlisted combat photographers in the U.S. military.
 
PondelWilkinson did a little pro bono public relations work for the exhibit, which was created to raise awareness and provide funding for The Wounded Warrior Project, a non-profit that helps severely injured soldiers transition to civilian life. The Los Angeles Times, Newsweek and others have written about the show, and the curator would be honored to host any friends of the firm who would like to take a personalized tour. Of course, you are more than welcome to peruse on your own time as well.
 
If you are interested in checking out the exhibit, Reform Gallery is located at 816 N. La Cienega Blvd., Los Angeles, CA 90069. For more information, you are also welcome to call the exhibit’s curator, Dane Jensen, at 323.632.2909. Or, check out the Eye of the Storm Web site. 

 

Evan Pondel, Vice President, epondel@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
 
 

Kendall Jackson

So, NIRI hosted its annual Los Angeles dinner last night at the Loews Santa Monica Beach Hotel.  I was the first person to arrive (gulp) and quickly did a u-turn at the door to avoid feeling like an over zealous investor relations professional.  But then I noticed Kendall Jackson standing at the bar.  I affixed my name tag to my lapel and meandered over to the bar for a chat with Mr. Jackson.  I kept my head down at first, you know, to keep the casual nature of the event in full effect.  Armed with business cards and a fresh coat of antiperspirant, I proceeded to speak with Mr. Jackson.  I said hello, and before he could utter a word, his handler, the bartender, informed me that it would cost $5 to speak with Mr. Jackson.  
 
I forked over the $5 and spent the next hour and a half entertaining Mr. Jackson, along with other investor relations professionals.  We met Jeff Morgan, the recently appointed chief executive officer of NIRI.  We said hello to Jim Lucas of Abernathy MacGregor.  We also listened to Linda Kelleher, executive vice president of NIRI, talk about shareholder activism and where the industry is headed.  Specifically, Kelleher said instead of letting activist shareholders come to you with questions about a particular company, you should proactively be reaching out to them.  My motto for 2008: Engage activism with activism.  And with that I finished my conversation with Kendall Jackson and proactively ordered another one at the bar.

 

Evan Pondel, Senior Associate, epondel@pondel.com
 
 

A Little Optimism for ’08

It never hurts to express a little optimism for what could be in 2008.  And the Wall Street Journal did just that this morning with a list of why investors should feel pretty darn good about the year ahead.
 
Drum roll, please.
 

  1. Stocks rally — Assuming we’ve seen the worst in the fourth quarter.
  2. The housing market stabilizes — Really, how low can it go?
  3. Consumer spending remains solid — A healthy job market is keeping those cash registers ringing.
  4. Corporate profits accelerate — The jury is still out on this one.
  5. Economic growth accelerates — The Fed’s gonna have to provide some assistance here.

 

 — 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