Investor Non-relations

Thursday, March 08, 2007 | | 4 comments »

Regularly this scribe stumbles upon junior UK quoted companies and their brokers who appear to regard small/smaller investors as a source of funds only. The idea of earning those funds by answering questions, performing a tour d’horizon for contextual purposes or doing other than shutting ear-holes is, it seems, a risible concept.

If the scribe sounds bitter he is not. Merely surprised that investor relations departments miss such tricks. Even if they abhor dealing with non-institutional sized investors it is still the best way to empty their pockets and buoy equity. Well-deployed manners are amazingly profitable ("where are the customers yachts") and word-of-mouth publicity is astonishingly effective.

A small and unfairly chosen example (for polite but forgetful Scisys plc and their broker Bridgewell came a close second in a wide field) is Chelford plc. Tiny financial software installer and maintainer. Two profit warnings for the same delayed contract from what appear to be perma-optimists in management. Slight credibility issues as a result.

Yet the recovery prospects for the crucified equity look decent enough. Cue emails and calls to company and broker Charles Stanley for the barest financial details and context. Charles Stanley provided a well meaning run around ending at an unresponsive analyst department. For their part, Chelford may as well not provide contact details such has been the silence.

There are enough on-the-ball enterprises clamouring for funds that investors can just walk away from instances such as these. But it is curious that when some smaller firms' equity is shunned they still fail to embark on a bit of glad, as opposed to bitch, slapping with potential investors.

Enough spadework goes into research without investors being required to forge the tool as well; and it is tempting to conclude that inability to communicate reflects on management’s talent more generally.

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  1. Anonymous // 3/08/2007 10:41:00 AM

    for what it's worth, this crew have a clown pr agency -- bankside comms -- Steve Liebmann on 07802 888 159.

    As a generally rule i would short any and all Bankside clients.

  2. RJH Adams // 3/08/2007 11:27:00 AM

    Financial PR, an area rich in unwritten study.

    Anonymous comment from the College Hill Associates chaps (don't they realise these things are traceable?) was left recently. They may have a point ("Wow...I bet you feel stupid!" in response to iSoft scribbles) but are they doing their clients any favours?

    And I thought PR people were smooth and suave...

  3. "Cassandra" // 3/08/2007 07:10:00 PM

    Unfortunately. financial PR expendtiure is rarely broken out as a line-item in financial statements to allow systematic study- at least in North American and Japanese, ones. Some good academic work has been done on advertsising expenditure in respect of "accounting conservatism", but financial PR is almost certainly an inverse indicator of the robustness of future stock price.

    I can most assuredly say that after much long and tortuous training in Advanced Cynicism, it all begins to sound like Radio Pyongyang vitriol....

  4. RJH Adams // 3/08/2007 08:20:00 PM

    I'll have to go and dig for PR spending research...

    Proxies for the Financial PR expenditure line might include enthusiasm for publishing anything without numbers that can be construed as positive.

    For some reason honesty seems to blow the inverse to performance (and credibility) relationship.

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