Four Pitfalls To Avoid When Dealing With The Street

Recently, I helped facilitate a day-long IR training session for a client organization. It was a really interesting session as the participants included folks from communications, finance and legal so we had the chance to look at the issues from a number of different vantage points.

During lunch, one of our senior advisors who is a former Institutional Investor All-American research analyst spoke to the group to provide yet another view of the world, as well as field any and all questions on the “mind of the investor.” During this discussion, one of the participants asked, “What are some things that companies do that absolutely infuriates investors and analysts?”

I thought this was a great question… here’s the list the former analyst came up with:

1. Don’t be dismissive of a question. It doesn’t make you look smart, it makes you look like a defensive jerk. It will also cause the Street to believe that it has uncovered something meaningful.
2. Don’t give out information you don’t want to give out. Investors and analysts are not your friends - and while they may not quote you direct, they will share whatever information you give them.
3. Stay consistent in your disclosures. If you provided a particular data point this quarter, investors are going expect an update on that data point next quarter. Inconsistency in disclosure will cause investors to believe (needlessly in most cases) that you are hiding something - or worse.
4. Help the Street understand the company’s strategic mindset. This isn’t an ask for material, non-public information or proprietary data, rather it is a request for a better understanding on how the company is measuring progress and identify opportunities. The Street wants a better sense of the environment in which you operate - broadly speaking, where are the pressure points, where are the windows of opportunity, etc.

Easy as pie, right? I actually thought it was a pretty fair and doable list. Based on your experience, what would you add or delete from this list?

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