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What is your understanding of Reg FD?

I’ve had this experience before but I recently met with a company that threw up the Reg FD road block on almost every question I had – this really tweaked me out. This company is basically private anyway (100m market cap, no meaningful disclosures, no IR dept, never talks to or meets with investors), so it was very frustrating that they would not answer any questions.

Two schools of thought on Reg FD:

1) Companies cannot answer anything that is not publicly available in writing.

2) Companies are generally allowed to answer questions about the business in a thoughtful discussion with investors even if some topics are not 100% spelled out in writing or disclosed to everyone AS LONG AS they don’t go over the line in conduct, such as blessing models, telling analysts they will beat the quarter, selectively disclosing major material events, and so on. This raises the question of where the line is, but I think most people of reasonable judgment can find the line – if they tell me that consensus for next quarter is $0.35 and they’re about to report $0.38, that is clearly over the line.


I can’t see how #1 makes any sense – why even meet with investors? I already read the subpar disclosures in the 10-k, thanks. I’m curious to know what others have experienced or what thoughts the rest of you have on this subject. Most of the companies I meet are pretty liberal about it as long as you don’t intentionally try to cross the line, a few will outright tell you anything you want to know, and an even smaller minority will straight up tell you material information (although this cuts both ways – they may be lying).

So basically, are companies that fall into category 1 operating under false premises, or has Reg FD fallen by the wayside and is now once again being abused by companies in category 2 (Reg FD was instituted in the year 2000)? Or is it somewhere in between?

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I have met some people that seem to act as if Reg FD were #1, but my general sentiment is that the people that do this are generally inexperienced at their IR job (or other investor-facing role), and as you noted, they may be doing more harm than good to the company they represent simply because they come off as standoff-ish and uninformative.

I agree that people in camp #1 are generally inexperienced. Very seasoned execs seem to know that the stock market game is bull**** anyway and are especially willing to throw you a bone if they like you (being likeable is extremely important in meeting management – even if you’re a shareholder,  no one HAS to be helpful). Inexperienced people often revert to CYA mode pretty quickly and hide behind “our lawyers won’t let us talk about that” – then buy me out at a premium because you shouldn’t be public (thanks for wasting my time!).

I’m pretty sure the answer is #2 (objectively) and that a huge part of “the game” is being able to extract information better than your competitors. One thing I have noticed beyond a shadow of a doubt is that I get better information the larger the position my boss owns in a company. I also may get better information if it’s a company that “never” talks to investors, although that’s 50-50 depending on which camp they fall into. Another tip off might be a young exec in his early 40s with no public company experience – they are often floored that someone under 30 could come in and ask intelligent questions, and they might open up and say a lot. Yet another would be asking good questions to a company that seems obviously annoyed on conference calls by analysts who asked retarded questions. I find nothing objectionable about any of these as long as they are answering questions about the business and not blantantly leaking inside information (going to beat next quarter, etc.) although if they want to leak to me and me only, I suppose that might work.