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Beware of Lurking Wolves

Sometimes, I pick up my own phone at the office. Last week, a friendly caller caught me off guard. The conversation went something like this:

Caller: Hello, Roger, how are you?

Roger: Fine, thanks, how ‘bout yourself?

Caller: I am also fine, thank you for asking. I am calling to let you know that our analysts have started recommending the stocks of several conservative, dividend-paying, major oil companies They are very safe investments, and I would like to start a relationship with you.

Roger: Pardon me?

Caller:  I also want you to know that from time to time we come across the stocks of some smaller companies that our analysts research thoroughly. And within the next week or so, there is one that we will be formally recommending, because of some announcements we believe the company will we making in the next two months.

Roger: Who is this?

Caller: I will give you my full contact information in a minute, but please let me finish.

Roger: May I have your name and the name of your company?

Caller: Now Roger, no one can predict what will happen to the price when those announcements start to flow, but I would like to call you at the right time, so that as a client, you may take advantage of our knowledge. Buying a few shares of a major oil company can establish the account, then we can move quickly on the smaller companies at the right time.

I never got the fellow’s name, since I hung up on him. But his pitch was familiar. It was reminiscent of cold calls that came in prior to the 2013 release of The Wolf of Wall Street.

Almost comedic, but perhaps disturbing, the call was the second one I received—with precisely the same script—in the past couple of weeks. Could the wolves be coming back? Have their prison terms ended? Perhaps it’s the perceived frothy Dow. Or maybe the fake news mantra. Or the newswire upstarts that make it ridiculously inexpensive, and often without traditional controls, to transmit press releases from virtually any source.

Most readers of this blog know better and would not fall for such scam calls. But beware, nevertheless. Hopefully, history is not repeating itself.

Roger Pondel, rpondel@pondel.com

Heard During the Breaks

Often at professional conferences, the stuff one hears during the breaks and at the cocktail hour is more valuable than the content in some of the formal presentations. I’m not talking about gossip, but real trends and ideas that have practical use.

Here are a few random items worth thinking about that I jotted down from corridor and cocktail talk at the recent annual conference of the National Investor Relations Institute’s Senior Roundtable:

  • Cordial intervention with activist investors usually does more good than harm.
  • Certain things in a 10K or 10Q just cannot be easily explained in writing and can best be conveyed by a CEO or CFO at an in-person meeting.
  • Try participating in a reverse road show, where the portfolio managers come to you in small groups, often as sponsored bus tours in bigger cities with several public companies in relatively close proximity. It saves your CEOs and CFOs much time and expense.
  • How investment banks get paid by the institutions for helping to provide corporate access—a function that IR professionals formerly held—is under increasing scrutiny. Many CEOs and IROs do not even know that the banks get paid for this service.
  • Sustainability is gaining steam as a topic that public companies must pay closer attention to, but for which few in the C-suite really want to take responsibility. It could be a function that IR professionals should grab.
  • Watch for board tenure to become among the latest hot governance topics, regardless of whether the directors are doing their jobs well.
  • Activists usually operate in packs. So even if an activist only owns 1% of your shares, pay heed, because behind those shares could be a much bigger percentage from friends.
  • Boards must discuss continuous shareholder value improvement. It’s their job and does not mean they are being promotional.
  • The buy side, unless an index fund, regards access to management as part of doing proper due diligence—whether they are invited to the table by an IR professional, an institutional salesperson or a sell-side analyst.

As with most conferences, this one also had a motivational speaker who was not there because of the subject matter, but rather to re-charge the batteries of the attendees.  Yes, he wrote a book and did a signing. Since the conference was a private affair, however, you’ll have to call me if you want his or his book’s name.  It’s a quick, easy read, and I will take the liberty of ending this post with a thought from the book that I particularly like about the stresses we all endure in our jobs and having the right attitude:  “We are all lucky that we get to go to work each day…rather than we got to go to work.”

–Roger Pondel, rpondel@pondel.com