Editor's note: This is the second half of a two-part column. Please be sure to check out the first half.
A Question of Aptitude, Not Access
I also think there has to be a differentiation between investors who are diligent, educated and focused on the important issues and those who walk around with zero sense of the facts and just want to whine and complain that they are losing money. Notice how I specifically did not refer to either side of that coin as being uniquely individual vs. institutional. I've seen random acts of stupidity and grievous time-wasting by both sides. There is no place on a conference call for people asking factual questions that can be found in the annual report that they haven't read.
Nor is there a place on a conference call for someone asking the CEO what airline he took from Chicago to New York. (On my deathbed, I will ask for the two minutes of my life spent listening to a caller berate a CEO because he took a direct flight at twice the price of a connecting flight.) I spend 70 hours a week breathing investing, and I don't want my limited time with management wasted by someone who happened to wander onto a conference call and decided it was Speaker's Corner in Hyde Park.
But an important question remains: How does a company practically comply with the intent of a rule calling for "simultaneous and universal disclosure of material information"? While the Internet sure looks like a good start, why should a company have to admit just anyone to the calls if anyone can include a direct competitor? For this reason, I think many widespread conference calls have devolved into bland fact-reading exercises, where little new insight can be gleaned from them.
I also think that many of the aforementioned issues apply to roadshows for IPOs. There is no reason why the public can't listen to a Webcast of a roadshow. First of all, you certainly aren't going to get any material amount of stock in a hot deal, so the whole point is nearly moot. Secondly, the whole issue of "qualified" investors (those with millions of dollars or more in assets) is a joke in this day and age: If you can read a prospectus, why can't you hear the pitch in the Internet flesh?
But that's no solution. I've been to plenty of roadshows. The food is so-so, management is surrounded by attorneys and rarely says anything that is not in the book, and when asked a really specific question regarding numbers, the execs defer to the analyst of the investment bank doing the deal. Trust me, all ye individual investors, there is little that goes on of substance that you are missing.
That said, I still like to go and see the whites of their eyes. It may not help this investment at this time, but sometimes a little personal contact can put the numbers into perspective.
I am searching for a hard-hitting conclusion, but there is none. This is a tricky area. Good performance over the long run comes from better interpretation of information that, for the most part, is out there for nearly anyone to grab. That, and having the discipline to act decisively and in relative size.
If I am working 70 hours a week to develop industry contacts and take the time and effort to spend two days visiting a company to try to understand what makes it tick, I will have information that someone who picks up
on Sunday will not have. I just hope that well-intentioned efforts to democratize some of the poor practices in corporate information dissemination will not cause companies to clam up entirely.
Jeffrey Bronchick is chief investment officer of Reed Conner & Birdwell, a Los Angeles-based money management firm with $1.2 billion of assets under management for institutions and taxable individuals. Bronchick also manages the RCB Small Cap Value fund. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Bronchick appreciates your feedback at