Monday, March 26, 2007

What Kind of an Analyst Are You Dealing With?

Welcome to my blog devoted to investor relations. I’ve done some searching on the web and can find very little devoted to the profession of investor relations and so I can only conclude that this one of the first blogs devoted to the arcane art/science of conducting a dialog between corporate management and the investing public. My goal is to bring some sense and clarity, together with some opinion and hopefully some fun, to investor relations.

This site is not devoted to “how to” articles, although from time to time I may write about best practices. It’s much more likely that the articles here will be “how not to” pieces, pointing out things that in my opinion can be done better. Better yet, from time to time, I hope to get inspired and give people a new way of thinking about things. We’re all busy, so typical posts will be short, 3 – 4 paragraphs at most with one or two ideas to chew on.

With that, here’s my first entry:

What Kind of an Analyst Are You Dealing With? (Part 1)

Securities analysts come in all sizes, shapes, genders and ages (although most tend to look distressingly young to me these days), but I’ve found that they break down into several subspecies that are readily identifiable. Herewith the first:
Vampirus Informatious (Information vampire) This particular type of analyst just can’t get enough information. All analysts crave information, but this analyst takes it to the extreme. If you have a meeting with them, their goal is to literally suck you dry of all information remotely related to your company, industry and economic sector. No detail is too small. Cauliflower ear from their phone calls is a common occurrence. Time limits on meetings are merely advisory. They have a unique ability to make you feel guilty if you have another meeting and need to end your session with them. One question and a related follow-up on the conference call are never enough; 5 – 6 questions are barely enough: if they had their way they would prefer to ask all the questions on the call. They will follow you down the hall, down the elevator, out to your car, all in the name of getting those last few questions in. I’ve never had one follow me into the men’s room, but it is not beyond the realm of possibility.
If you stop and think for a minute about the role of corporate investor relations, where the object, within prescribed limits, is to limit and channel the flow of information to things the company wants to talk about, you can see that there is an inherent conflict of interests here. This is not a match made in heaven. There are probably some things you can do to ease the conflicts. Set and keep time limits, which should help the analyst set priorities in the questions they ask. Feed the beast – within reason. A lot of details just aren’t worth sweating about. In fact, sometimes it’s the little factoids that people remember. It is the odd fact or figure that may help this type of analyst get remembered by their clients or portfolio managers. Structure meetings so that you can clear away minor informational points before the analyst meets senior management, either by a phone call beforehand or a list of major topics they want to cover when they meet management. Best of all, keep a sense of humor about it all. These are usually type A personalities you're dealing with, and you can't change the stripes on the zebra.
This post is the first in a series curious animals that inhabit the investor relations landscape. I have many more, but I'd love to hear from others as to their favorite IR species.