IR Horror Stories

It’s business as usual for me last week; I run the stock screener and notice a pretty interesting company. After doing some due diligence and liking what I see (strong financials, unbelievable growth, good product, and a supposedly good management team), I decide to give IR a call. I always want to speak with management for a company I’m looking to invest in, but this company warranted a conversation even more due to how complicated its business and accompanying financials are. In fact, I’ve never been so confused after reading a 10-K for the first time. So I pick up the phone and get PR (no investor relations department) and leave a quick message. Three days by and no callback, so I call again and get in touch with the head of PR. Although she’s nice, she seems completely incompetent. No big deal, though, since I’m looking to speak with management. She lets me know that the way they handle things there is by emailing her a list of questions that she will relay to management. Great, management will take the time to look over what I need and get back to me! Wrong. I email the questions and get a response 5 days later from PR again asking me how many AUM we have ($800M by the way, so we’re not that small, especially when you consider this company has a cap of only $850M). A week passes and I need to get the PM on the line to call her. She returns the call a few days later saying she will answer the questions since management is busy. We make the call a week later and the following conversation goes down: Q: We mapped out a growth algorithm and wanted to see if these numbers are realistic heading into the future…? A: Sorry, we don’t give guidance: Q: Another 3 or 4 questions just hoping to shed us some light on what the hell this company will do over the next few years… A: Sorry, we don’t give guidance Q: We noticed that growth is very dependant on… A: The risks are in our Q and K The conversation ends up with the PM asking them if this is how they normally treat potential investors. She apologized and let us know we should be hearing back from management. Yeah right. Just goes to show how crucial IR is to a company. Everything we looked at was great but if management feels answers such “look in our 10-Q and 10-K” is satisfactory, then who knows what the hell is going through their minds. Maybe one of my questions regarding the high amount of short interest on the company was indirectly answered… Any other similar stories?

i think i know the company you’re talking about…high insider ownership, right? son of the founder is CEO…financial? regardless of whether it’s the company i’m thinking of, i’d guess that mgmt/dirs own a lot of the stock and simply dont care about some (any) investor they dont have an existing relationship with. not that uncommon.

Any chance this girl was new? There was a new IR contact for a company I followed on the sell side. It took a little while for that person to get comfortable fielding the questions. You could tell they were trained to give the “it’s in the 10K” answer if ever in doubt.

PRAA? Looks like we are using the same stock screener! :slight_smile:

I think probably many institutional investors also were mistreated by their “IR”. So they think PRAA might have cooked the book and therefore they short the hell out of it.

PRAA isnt the company. mgmt doesnt own the stock and they’ve always been very promotional.

wegowayback Wrote: ------------------------------------------------------- > i think i know the company you’re talking > about…high insider ownership, right? son of the > founder is CEO…financial? > > regardless of whether it’s the company i’m > thinking of, i’d guess that mgmt/dirs own a lot of > the stock and simply dont care about some (any) > investor they dont have an existing relationship > with. not that uncommon. If you’re talking about CORS, I’d be surprised if you could even get that far.

wegowayback Wrote: ------------------------------------------------------- > PRAA isnt the company. mgmt doesnt own the stock > and they’ve always been very promotional. So why does PRAA have 41% short interest? My stock screener doesn’t have CORS. I guess it is because it doesn’t have a nice current ratio.

It’s PRAA. I never mentioned that it had high insider ownership. I spent a good three days building out a growth model for that company where all I need to know is the face value of debt they should purchase. Just wayyyy too many variables going into that company’s future growth prospects, though. Management made the decision 10x easier though.

In terms of the short interest… Try getting an accurate read on historical cash flow and you’ll see why. I wouldn’t call it cooking the books, but they can basically do whatever they hell they want with them and get away with it.

HoldSideAnalyst Wrote: ------------------------------------------------------- > If you’re talking about CORS, I’d be surprised if > you could even get that far. heh heh…that didnt take long. tim taylor used to actually return my calls…stopped about a year ago. years ago the president of my firm used to even go out there and meet with glickman. PRAA!? sounds like something screwy going on, because those guys havent been anywhere close to that reclusive in my experience. they hardly own any stock, they hit up conferences, they have conf calls…just weird that they’d give you such a runaround. maybe they thought you were just gonna short it.

PRE Wrote: ------------------------------------------------------- > In terms of the short interest… > > Try getting an accurate read on historical cash > flow and you’ll see why. I wouldn’t call it > cooking the books, but they can basically do > whatever they hell they want with them and get > away with it. If I had to choose right now, I’d short it over buy it. But nothing did indicate that when we called.

But based on the chart, most shorties are losing money. If they can keep doing creative accounting for a while, you have to have big pocket to bet against them. Probably avoid it is the best course for now.

> Q: We mapped out a growth algorithm and wanted to > see if these numbers are realistic heading into > the future…? > > A: Sorry, we don’t give guidance: > > Q: Another 3 or 4 questions just hoping to shed us > some light on what the hell this company will do > over the next few years… > > A: Sorry, we don’t give guidance I am going to actually side with the PR lady. Based on your questions (2 questions) above, I could understand why the PR (or any IR, as a matter of factor) (director?) would be less than receptive. The questions you asked clearly is aiming (indirectly of course) at getting her to fork over the company’s future guidance, which would clearly violate FD. This is assuming that they do have such guidance/multi-year game plan in place and/or she is privy to such info. Second, its very hard to blame a PR person over INVESTORS Relation question. PRAA is very complex company, to ask a PR person to go over the fine points of the business model is asking too much. With a finance/financial service company, always go directly to CFO. I would never contact PR of a finance company. Third, getting management on the phone during the latter part of August (Summer Vacation) and early September (Conference Season begins) has always been tough.

negativefcf Wrote: ------------------------------------------------------- > I am going to actually side with the PR lady. > > Based on your questions (2 questions) above, I > could understand why the PR (or any IR, as a > matter of factor) (director?) would be less than > receptive. The questions you asked clearly is > aiming (indirectly of course) at getting her to > fork over the company’s future guidance, which > would clearly violate FD. This is assuming that > they do have such guidance/multi-year game plan in > place and/or she is privy to such info. > > Second, its very hard to blame a PR person over > INVESTORS Relation question. PRAA is very complex > company, to ask a PR person to go over the fine > points of the business model is asking too much. > With a finance/financial service company, always > go directly to CFO. I would never contact PR of a > finance company. > > Third, getting management on the phone during the > latter part of August (Summer Vacation) and early > September (Conference Season begins) has always > been tough. 1. It’s understandable that someone from PR doesn’t know the answers to finance-related questions, but how is that anyone but the company’s fault? Numerous attempts to contact the CFO were made and I was always directed back to PR (no IR department as said before). For management to give PR those answers is completely unacceptable. 2. Do you honestly feel summer vacation is a good excuse to push off a call for over 3 weeks? 3. I can’t tell if you’re being serious about asking for long-term expectations. One of two things are true: 1. you work for PRAA (not likely) or 2. you have never been involved in any type of buy-side role.

  1. “The conversation ends up with the PM asking them if this is how they normally treat potential investors” I have been on the buy side for a couple of years now… and when company specifically do not give guidance, then they are breaking FD rules if they disclose “long-term expectations” to a selective group of investor (in this case, your firm). Plain and simple. Moreover, you asked that question (in various forms) TWICE, not once but twice. Her responses are appropriate, and any competent IR director would have done the same. Realistically, what more do you expect out of a PR lady? To ask a Public Relations official (who is always conservative by nature) to disclose “long term expectations” is naive. I am surprised that yourself and PM hasn’t figure it out. 2. 3 weeks? First… something doesn’t add up …“It’s business as usual for me last week” Second… 3 weeks is nothing. There are companies that do not return calls at all. There are quiet period issue, summer vacation, conference season… etc. The PR told you that management is busy. 3 weeks lag is nothing to lose sleep on. I request phone calls and visits all the time, 3 weeks is hardly noticeable.