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