For a lot of people, their favorite part of the job is the exposure to executives and the ability to grill them. Obviously most questions are company specific but anybody have some favorite high-level or industry wide questions to ask C-suite/IR that allow you to read between the lines?
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Asking what keeps them up at night helps parse through the biggest risks they see to their business.
I really like some of these. http://www.cleareyesinvesting.com/2017/11/15-questions-to-ask-managemen…
Some of those are good but I feel like some of them are a only really applicable to small cap companies. You're not going to ask Dimon to walk you through JPM's M&A process...
Notes: -Don't ask yes/no questions, more why/how. -Don't lead answers by framing the question or giving your opinion within the question. -Be specific, don't open yourself up to the IR sales pitch type answer.
I typically ask for a call with management as the last step in my process, so most of my questions are very specific. But I do have a few of the high-level ones that you're specifically looking for that I like to work in. In no particular order:
-What are the longer-term red flags that I should be watching for that would make me a seller? -What kind of incremental return or hurdle rate do you think about internally on capex or M&A decisions? (most guys will say "above our cost of capital", which is a useless answer but sometimes guys will give you details) -Why do you think you're trading at a premium/discount to your peers/the market? -Which sell-side analyst would you recommend I speak with about your stock? -If you had to invest in a competitor, who would it be? (variations of this, not always invest: who do you think is best positioned on this or that...?) -Is there a public company inside or outside of the industry that you view as a model to emulate or that you admire? -What's one of the biggest mistakes the company has made in its history and how do you think it or you responded (depends how long they've been there, can also ask how would you grade the previous CEO/CFO's performance during their time at the company? What did they get right/wrong?) -What's the biggest challenge for the business going forward and what are you doing now to prepare for it? -What do you view as your competitive advantage besides (insert whatever they gas up in their IR presentations as their big advantage)? -Why wouldn't your customers just do this themselves? (obviously depends on the type of business, doesn't work for more consumer-oriented businesses) -What are some of the processes you have in place to mitigate risk in your supply chain? (again, business dependent) -What technology has had the greatest impact on the business in the last 10 years? What technology is on the horizon that will impact, or be disruptive, in the future...positively (improve productivity) or negatively (take share)?
Of that list, I always ask the red flags that would make me a seller, and the biggest mistake you made in the past questions. I seem to get the most quality-info out of those that you otherwise wouldn't, and it can reveal any bias they have from past mistakes and what they're worried about going forward. I tend to save the high-level type questions for the end.
Really great list. One that I'll add is I typically ask what quality of their business do they think most investors they speak with just don't seem to "get". 50/50 shot of them reiterating the current pitch they've been giving, but I've learned some really interesting things.
My best advice is super simple.....BE PREPARED. Read through the last year of press releases, conference calls, and presentations.
Ask any question not already covered in the above.
I've sat through hundreds of meetings with management teams. About 80% of analysts ask questions that are already answered in public presentations, press releases, and earnings call transcripts. It's really an embarrassment to the millions and billions that many of these guys manage.
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