Likely prepping for Halloween last week, several quarterly earnings calls were usurped by a rogue analyst who masqueraded as yet another sell-side analyst in an effort to freely ask questions during the Q&A session. Most of the companies targeted were in the consumer sector, and the questions generally surrounded each company’s e-commerce initiatives. While I applauded the individual’s effort to conduct some primary research in a creative manner, his antics were disruptive and inappropriate.
It seems as though the individual pretended to be an analyst of higher repute, using a faux identity to gain access to management when queuing up for the Q&A session. Even though he faithfully divulged his true identity when speaking with management, the immediate reaction by the management team was one of panic and apprehension about what the person was going to say. Because these calls are in a public forum, allowing an unknown individual to have unfettered access to the podium mic could be dangerous.
Which brings me to the topic of managing Q&A sessions altogether. Everyone knows about the myriad online tools available to manage the conference call Q&A session in real time. Yes, the game is slightly rigged, but if all individuals who have a question or comment are allowed their time, these calls would last forever. The cost for hosting a conference call is also expensive, and it is imperative to monitor managements’ time. So let me warn you now, if you are a whacko or trouble-maker short, we have the means to keep you out of the party.
With last week’s antics, it might be due time for additional rigors in the system. To avoid conference call interlopers, managements may consider creating two call-in numbers or two ID passcodes. Assign one to Group A (perhaps a small group consisting of your sell-side analysts) and one to Group B (all others, often the buy-side community). Coordinate with the conference call provider and instruct them as to which group is allowed to participate in the Q&A.
Of course, these are just examples and not necessarily the best practices for every company. But I would rather try to unmask cloaked callers than completely pull the plug on this important quarterly ritual.
— PondelWilkinson, email@example.com