In our investor relations practice we deal with shareholders of all types, from individual shareholders to the world's largest institutions. We often act as gatekeepers for our clients, offering introductory calls and meetings to help investors familiarize themselves with companies and then follow up when we encounter questions where we don't have ready answers. In most cases, our relationships with investors are friendly, or at the very least cordial, as we are both seeking the same goal, for the investor to understand the fundamentals of our clients' businesses so they can make informed investment decisions.
So what happens when you encounter a somewhat more curmudgeonly investor, the kind of person that never seems happy no matter what you say or do? We've seen a number of instances, where investors just seem truly disgruntled with a company's management, financial performance or investment decisions, and often it seems like they really should not be invested in the company's stock. Recently we had a conversation with a portfolio manager that had been a long-time holder of a stock and after reporting quarterly earnings, he could find nothing positive in the report! Certainly we counsel clients to be realistic in their earnings releases, owning up to shortcomings but also highlighting the good things accomplished in the period. Needless to say, we've never published an earnings release that had no positive news, and no redeeming qualities to the results. So we asked ourselves, why does this person still own the stock if they can't find anything good about it? How should we respond to this investor?
Well, there are several ways to approach this, but in our experience, there are some fairly basic "do's" and "don'ts" when handing a shareholder like this:
1. Let them vent. Often, these investors may not really hold the overwhelming negative opinion they shared, it could just be they are very frustrated with a few aspects of company performance, but are having trouble articulating their thoughts. In this case, letting them vent to you, before they hit the speed dial to the CEO or CFO could give you an opportunity to identify the true underlying causes of the frustration and address it before things go too far south. Sometimes the solution ends up being simple, like one investor we dealt with several years ago with a similar attitude, and all it came down to was that he didn't like having to wait a week for one financial number to be published in the 10-Q. We adjusted our process and began reporting the number in the earnings release and he couldn't have been more pleased. We alleviated his frustration and showed him we were listening and responsive to his ideas.
2. Turn the question back to them. As investors express their disappointment or frustration, sometimes it pays to bring the conversation back to them through a variety of questions. Simple questions like, "Were there really no positive aspects of the earnings report? What about [name a positive aspect]?" or "If performance is as poor as you perceive, what could we do to improve it?" Often the answers to these types of questions might give insight into what is troubling the investor, or perhaps identify areas where we aren't effectively communicating the positive messages of our performance.
3. It's okay to let go. Sometimes there is nothing you can do to change the direction or tenor of a relationship with a frustrated shareholder. When their response to questions on how to improve the business consists of "fire the management team," maybe it's time to move on. Politely tell them you're sorry they feel this way about the company and invite them to keep the lines of communication open. Just don't be surprised if you never hear from them again.
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