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What Can Investors Learn From Analyst Meetings?
Companies sometimes come to New York (or other cities with a sizable investor presence) to conduct meetings with securities analysts. These meetings are open to various kinds of analysts: equity, fixed-income, buy-side (working for institutional investors), sell-side (putting out reports for institutional investors), or independent research analysts, such as those writing reports for The Value Line Investment Survey. They are usually held in a meeting room at a hotel. Often, they are web cast over the company’s web site, so that investors can listen to the presentation live or through an archived event.
Some companies make it a point to come to New York at least once a year for an analyst meeting. For example, MDU Resources (MDU) annually makes a presentation in mid-March. Other companies come once every few years. And some companies come only when making a big announcement, such as a merger or acquisition.
The company’s chief executive officer almost always makes part of the presentation. The chief financial officer is usually another presenter. Often, other executives, such as division heads, conduct segments of the presentation, too. The slides that the presenters use are usually posted on the company’s web site. Once the speakers are finished, analysts have an opportunity to ask questions.
Most analysts already know enough about the company for management to keep any introductory information brief. The executives discuss the company’s strategy, and how they expect to carry out that strategy. Management provides updates on such things as major projects, key legal matters, or upcoming financing moves. Without being specific, the company may also give its viewpoint on the prospects for mergers or acquisitions. Management often discusses major topics that affect its entire industry, as well.
Analysts sometimes obtain anecdotal information about the company, or its industry, through informal talks with company executives before or after the meeting. They may not disclose material nonpublic information—that would violate the SEC’s Regulation FD (Fair Disclosure)—but the discussions are valuable for the analysts, anyway. To provide one such example, several years ago, the former head of Hawaiian Electric Industries’ (HE) American Savings Bank subsidiary pointed out that the state’s unemployment rate can be a misleading measure of its economic health. Due to the high cost of living there, many workers have more than one job. When they lose one of their jobs, they are clearly worse off, but they don’t show up in the unemployment figures because they still have another job.
Not all meetings are held in the city where analysts work. Sometimes, companies invite analysts to their headquarters. These field trips are especially informative because, in addition to hearing from the company’s executives, analysts can tour its operating facilities. Analysts can also assess a company’s depth of management by speaking to managers while on the tour who are below the level of division president.
Meetings also give analysts an opportunity to hear what their peers are thinking about the company, and which issues concern them. Even though analysts are provided with the same information and examine the same financial statements, they don’t all look at companies in the same way.
Individual investors normally do not get a chance to ask questions to company management (except at the company’s annual meeting, perhaps). Thanks to analyst meetings that are web cast, these investors have access to more in-depth information than they did 20 years ago. However, they might need to make a time commitment—some of these meetings can last a few hours—but their understanding of the company will most probably be enhanced.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.