Last week my investor relations class at Rice was privileged to have Rob Rohn, a principal with Sustainable Growth Advisors, come in and talk about what investor relations looks like from the Buy Side. Rob has been in the business of investment management for over twenty years at some great money manager shops and has a wealth of experience trying to parse through what companies are really saying. Rob started the class with a short tongue in cheek piece he titled “Jaded View of IR” that I thought was worth sharing with a larger audience. Herewith, accompanied by a few explanatory notes is what Rob presented:
The textbook I wrote for the Investor Relations class defines investor relations as follows:
“Investor relations is the process of a company conveying appropriate information to investors in order to allow them to make an informed investment decision regarding that company.”
Rob’s impression of how many investor relations people see their function:
Investor Relations is the art of selling the story without providing useful information while guarding the door to senior management.
Rob then went on to explain how to translate statements form management:
Management: “We are in a challenging environment”
What this really means: Business sucks.
Management: “We have not changed our earnings guidance”
What this really means: We might have to lower guidance.
Management: “Because of the uncertain environment we are suspending guidance”
What this really means: It’s getting worse.
Management: “We see signs of stabilization”
What this really means: It still sucks.
Management: “We see opportunities for efficiency improvements”
What this really means: Big write-offs and lay-offs are coming.
Before everyone gets offended and huffy about someone dissing the profession, please understand that these remarks were intended as tongue in cheek and I, for one, thought they were pretty funny. Goodness knows we can all stand a dose of humor during these tough economic times. Also, just to add my two cents, I think there is more than a kernel of truth to much of what Rob says. Investor relations people often spend a lot of time and energy trying to put the best face on things, particularly when writing press releases. This is just a reminder that we’re probably not fooling anyone, particularly not the professional investors.