Re: Covering a Stock
Hey,
What is your daily ritual to stay up-to-date on the stocks within your universe?
Regards
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Every morning I come in and check Bloomberg, type in the company ticker followed by CN for current news and see if anything major has happened. Do the same again at lunch and before I go home in the evening. Also, sign up to all the RSS feeds so that you automatically get all press releases and news updates from the company's investor relations page. Keep a database with all dates of quarterly calls and investor relation days so you know whats coming up.
This, basically, plus any other resources you guys have like subscribing to a particular sell-sider's research somewhere that you do business so they'll send you their reports right as their published, etc.
if you have it set up, you can also load up BRC on bloomberg for your company which will give you all research reports that have your company mentioned. this includes broad industry reports as well as reports of peers/competitors in same sector, which can give a gauge of what will happen to your company in near future assuming the possible read-through is decent.
I get automatic updates on any company releases through their respective websites. Also I'm signed up with auto emails from any reports the other teams put out across the platform. Also you can set you Reuters or Bloomberg to send you auto updates at specific time intervals. That and I call IR atleast once a week depending on how long I haven't talked to them. Also we have a global diary that we share with the other regions within our industry.
As an ER guy, if you call IR that often, are these usually just quick little "tell me what's changed since Tuesday" conversations that last 10 minutes? When I'm talking to IR it's more of a 1.5-2 hour conversation with a lot of digging but obviously that's because I get less access probably. I guess the question is more, when you make a call to IR are they telling you stuff or are you asking them things? My sense has been that the sell side is very often a mouthpiece for management, and always wondered if they're feeding their IR guys stuff to tell the main analysts and information gets funneled down from there. And some ER guys are different than others and will color that info with their own perception of what's going on with the company and those are the dudes I usually find most valuable to talk to.
I can understand the skepticism as that has been a grounded perception of the sellside from the buy side. Like with most things it depends. We have a fairly sizable coverage universe so I don't call my companies every week but I try to touch base 2-3 times a month. Most of the times it's just a quick 10-15 minute chat touching on basically what's new with you. I delve deeper if I am changing numbers in my model and I want some color on industry trends or what they see in the order book. I have longer hour chats before earnings. They also like talking to me because they are curious about how the market perceives them currently as its part of their job to know.
We make it a point to have a healthy skepticism of what they say. We know they have their agenda and we have ours so we do our own analysis with what they say only a small component of it. They can get irritated sometimes about what we publish but that's part of the game of managing your franchise.
You nailed it, ER is mouthpiece for management/access to mangement. That being said, some ER shops are a bit different. Last place I worked at didn't take shit from management and refused to kiss ass. End result, some companies won't let us on earnings calls anymore etc. But thats the price of honesty these days.
What ir has 1.5 hours to talk to you???
And from a buy-side perspective, if you're not with an institution it really does depend, but my guess is most of the time if you were to email IR at a mid-cap with a yahoo address they'd probably put you on the back of the back burner's back burner. But that doesn't mean they'll give you "less serious" answers or anything like that. You just get a better response if you're either a shareholder already (if you're a top one you get management whenever the fuck you want, and if you don't then it means you should probably sell) or are a bigger buyer.
Just use bloomberg launchpad. I have to check news updates for 90+ companies as 40+ are in my coverage but I need to check the competitors and the entire sector as you would expect from an buy side analyst. It really helps because the heat source allows me to select shit that's more relevant vs stupid news feed like Sp500 revisions and shit. Also surprisingly Seeking Alpha Market Current is good for getting up to date news feeds, but do not read their contributors articles as you would expect they are all hobby investors and most of them don't know shit.
Also i'm curious about calling IR, i'm at a very small startup IA/HF and haven't had the chance to call them, just emails here and there which i usually get some short unhelpful response. Do you guys think they will take a buy side analyst call from a under 50 mil AUM start up seriously?
They'll take you seriously as long as you take them seriously. If they get the sense that their company just popped up in one of your screeners and you just call them to ask basic question then they would probably dismiss you but if you are serious about being a long term investor then they will respond in kind.
well my thing is, until we get much more funding, we will never have any meaningful shares like an AM or like Greenlight Capital. So dunno if these $10-$200 bil market cap companies will be willing to take their time with us when they have Fidelity and Vanguard, ER, and those independent companies like Cross Research on the other line.
Building relationships with IR is key as a buyside analyst - the more rapport / long standing relationship you have, the better. That said, I'm surprised how frequently some of you talk to IR - if you talk to IR once a week for all your portfolio companies, who has time to do anything else?
i agree that calling IR once a week is excessive. not sure how much incremental value you're getting by calling that often. imo its better to gather all your thoughts and have a solid 1-2 hr call once in a while.
i disagree that IR is inherently wary of hedgies. hedge funds can be long term investors as well, and they have dough to spend.
wary doesn't mean "won't work with," and it doesn't mean "there aren't long hedge funds" and it doesn't mean "hedge funds can't have a strong relationship with IR"
it means they are wary. it means that holding all things equal, they'd prefer to work with a non-hedge fund than a hedge fund. obviously when you look at ownership of any company's equity, you'll see a lot of hedge funds listed, so there will obviously be very close relationships.
but i stand by my claim. I had an IR guy completely lose his stack and cut us off from future meetings because we set up a series of 1-1s with the management, and the guys attending were hedge funds. like 8 meetings in a row back to back.
every single time we ask if we can host management with our clients, every...single...time...their #1 request is "please, keep the hedge funds to a minimum"
maybe my research franchise has a rep of just dealing with hedge fund clients? i can't really confirm if they say this to every sell side analyst out there. but they say it all the time. maybe they say this to us because the buy side is calling them once a week!
not trying to start a fight. just giving my input
Completely agree. IR loves meeting with "long only" money, which hedge funds typically are not...especially in my sector. As gamenumbers said, it doesn't mean hedge funds can't be good owners, but usually they're not the 'stickiest' of money and they could also be looking to short. While not always 100% true, mgmt's time is usually better spent meeting with mutual funds or long only asset managers and that's typically why they request to screen and/or see a list of clients before meeting with them.
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