A discussion on the MicroCapClub member’s forum: The challenge of accessing management is one that I often struggle with, especially as my research takes me towards the higher end of small caps. I thought it might be interesting to discuss different methods that people use. I typically attempt to email the CEO direct. Thankfully, I can leverage my position in the industry, which often helps (I think). If that fails, I go to IR or the CFO. I know some people use LinkedIn but question how much it really helps. What other methods do people use that may be of help for other people trying to do more of their own DD?
The following are actual responses from our member’s forum:
Respondent 1: While this isn’t available continuously throughout the year, annual shareholder meetings and earnings conference calls are pretty good bets. Also, finding conferences where the CEO is giving a presentation is also a good bet. Since these things are put together for the purpose of communicating with investors, you don’t need any sort of special “in” to get some direct access.
Respondent 2: Conferences might be the easiest way to get in front of management. Even if you just introduce yourself, give them a business card, etc. I think they’re much more likely to take your call in the future if you can point to a face to face introduction. Unfortunately, and it’s just a presumption, I don’t think a majority of people on this board are making it to conferences. However, your point about interacting on conference calls is an interesting one. In theory, management should be more willing to respond if you participate on their CC by asking a question or two. I typically only interact on CC’s once I’m very close to a story but that tactic might be one worth trying in the future.
Respondent 3: I think calling is preferable to e-mail. I think it takes a lot more management time to write responses to e-mail than to talk on the phone. Also, you get the added benefit of hearing their tone to answers as well as the opportunity to ask follow on questions. I have found that by talking on the phone I often learn additional items about the business model that I previously didn’t know or understand as management sometimes delves into areas that I didn’t think or know to ask questions. I usually start with the CEO or CFO depending upon the type of questions I have and the background of management. I do a lot of research before I call management. I will never waste their time by asking simple questions I could answer myself. Management is much happier to talk with stockholders if they have done their homework.
Respondent 4: Conferences are the way to go if you don’t know anything about industry/company but otherwise the best way is to really really really know the industry and then fedex overnight something directly to CEO with CEO’s name on it with some piece of industry or competitor information that he likely doesn’t know and tell him you’re a shareholder and you’d like to talk, you are going to be taking up his/her time and the CEO is of course very very busy so you need to offer some value in return generally if you really want their attention.
Respondent 5: Management wants to talk to you, but I agree that they don’t want to email you. If you can get them on the phone, you can accomplish 10x faster than what you can accomplish via email. You can also build a friendship with them, which is extremely valuable. Many small-cap CEOs don’t really follow the non-disclosure rules terribly well on the phone, so if you start joking around and enjoying the talk, they’ll often open up the whole book for you. “I mean, next week for example, not like this is public, but…” (happens all the time). Definitely call. The Bloomberg terminal usually has their direct line. LinkedIn is the second best to calling. People send InMail far easier than email.
Respondent 6: Being a working journalist (basically a reporter), I start by trying to know enough about the company to ask good questions. I have never bothered calling large companies because I don’t think they are set up for personal contact. I always say I am a shareholder even if I am not — that’s a white lie be cause I might be a shareholder the next day. I got a return call (almost immediately) from one CEO because I pointed out that a Churchill quote was ascribed to JFK in the annual report. My question was: “Are you similarly sloppy in running the operational side of the company?” I have had company officers tell me things they probably shouldn’t have but once they get interested in your conversation and your suggestions they open up more. If a company feels it is being neglected by investors, they will often be very happy that someone is interested in their stock. The bottom line is — it helps if you know how to interview people because you can sort of get the upper hand with almost any company officer if you can control the question and answer process to a certain degree. It’s really fun when they open up to you and you feel like you have an edge in your knowledge of where the company is headed.
Respondent 7: A communicative management team has always been a must for me. If they don’t respond to my phone calls then screw them. At least that is what I used to say. I have now toned it down a bit because I’ve found some CEO’s are just gun-shy because of past experiences with the usual criminals of microcap. In microcap, the CEO’s are bombarded with people trying to sell them something, whether its IR, research, investment banking, conferences, so on and so forth. Most CEO’s fall prey to the bad guys a couple times and then just say screw it, I’m not communicating with anyone. They have the battle scars that make then numb. Sometimes it simply takes a little bit of persistence to break down that wall. This is why the first thing I say when I talk to a CEO is, “My name is XYZ, I’m a full time investor in the microcap space, I’m not here to sell you anything, I just want to learn more about your company to perhaps buy stock in the open market”. Boom you hit them between the eyes with reality and they are silent for 10 seconds thinking “Holy Shit, real investors exist”. Now I will say even though I’m not nearly as hardlined as I used to be, it still pisses me off when CEO’s don’t respond to me, and I still give them a rather short leash. Because in the end not responding is just rude, inconsiderate, and unprofessional.
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