1. business and industrial
2. company
3. earnings

1
EVENT:
THE EQUICOM GROUP
HOW TO ATTRACT AND MAINTAIN ANALYST COVERAGE
TIME:
REFERENCE:
LENGTH:
DATE:
12H00 E.T.
CNW GROUP
APPROXIMATELY 59 MINUTES
SEPTEMBER 16, 2008
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2
BARRY HILDRED (President, The Equicom Group): Okay, I think we’re
ready to get started. I’m going to bring the music down here. Good afternoon, I
want to welcome everyone to another Equicom “Lunch and Learn” series event.
My name’s Barry Hildred. I’m President of the Equicom Group, and I’m going to
be acting as the moderator for an interactive discussion here today. We’re going
to talk about the topic of “How to Attract and Maintain Analyst Coverage.” We’ve
assembled a group of industry experts here to reside on the panel to engage in
this discussion today. They come from all sides of the Street, the buy and sellside, as well as professional advisors to public companies.
I’d just like to introduce the panel to you now before we get started, and I’m
going to give a brief, a very brief bio on each member. So, when I call your
name, if you can just give a wave so we can put a face to a name. Tom Liston.
Tom is Director of Research for Software and IT Services with Versant Partners.
For the past seven years, Tom has consistently ranked among the top five
software and IT services analysts in several surveys, including Brendan Wood,
StarMine, and Reuters.
Dawn Whitaker. Dawn is a partner with the law firm of Ogilvy Renault, where she
chairs the Finance and Securities team as well as co-chairing its Mining and
Resources team. Dawn is also a member of the Ontario Securities Commission
Continuous Disclosure Advisory Committee.
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Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or
result from any use made of this transcript or any error contained therein."
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3
David Pryor is a Research Associate with BMO Capital Markets. David joined
BMO in 2005 as an Equity Research Associate assisting in the coverage of
Special Situation stocks. In 2007, he joined the Mining Research team in the
same capacity, and currently assists in the coverage of junior exploration and
development of mining companies.
Duncan Stewart. Duncan is the founding partner and lead Portfolio Manager at
Duncan Stewart Asset Management. Duncan has worked in capital markets as
an analyst, fund manager, and venture capitalist, and has helped raise and invest
more than $2 billion since starting his career in 1990.
You may recognize
Duncan. He’s a frequent public speaker and commentator on financial markets.
And finally one of our own, Craig Armitage.
Craig’s a Vice President with
Equicom. He’s a seasoned communications consultant. He has more than 10
years of experience in the field, and he is responsible for our Technology and
Financial Services group.
Research analysts play a key role in shaping the perception that issuers
have within the investment community.
Arguably, an issuer’s valuation is
determined just as much by historical performance as it is by the market
perception of future performance, a perspective that is shaped and influenced by
research reports. In fact, there are many surveys that consistently show that
investors do turn to sell-side research when making investment decisions. So,
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result from any use made of this transcript or any error contained therein."
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4
given this level of influence, it’s not surprising that building and maintaining
relationships with the analyst community is often a primary investor relations
objective for public companies. And, based on our experience and work that
we’ve done with many issuers over the past 12 years, achieving these objectives
takes a considerable amount of planning, effort, and dialogue.
So, I’m going to just start the dialogue now. Today’s event is going to be
very interactive; in fact, there’s going to be no speaker presentations today. I am
going to ask a predetermined set of questions. We’re going to engage in some
discussion. After the discussion, we will open it up to the floor for any questions
that you might have, and we hope to get you out of here in relatively short order.
So, I’m going to just start with the questions for the panel. There is a
perception that often exists amongst issuers that research reports are tied to
investment banking fees, and if I don’t have an imminent need for capital, there’s
no sense in going to meet with the analyst because there isn’t going to be any
level of interest. Can I get a comment from someone?
TOM LISTON: Yes, sure, I think that comes from, you know, the late 90’s
and in early 2000 when some of that, indeed, probably did go on. Currently, the
regulators have tightened it up very much in the last number of years and, you
know, the short answer is most research out there, I hope, certainly ours, look for
great companies, and the bankers will find a way to bank. They’re not involved in
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5
the decision to research companies these days, and what we look at, so on and
so forth. But if we collectively look at a series of good, solid companies, they will
find ways, if they’re growing, they’ll find ways to raise money, show MMID, M&A
ideas, etc. So, pertinent production comes from the number of years ago, and
then furthered it along, in this case.
DAVID PRYOR: Yes, I’d echo, what you just said, that, you know, our
decisions are based upon the unique circumstances of the analyst and the firm in
terms of building a coverage list, and we’re looking for companies that have
investment merit, that there are interesting ideas for our clients. There are a
number of factors that go into the decision nowadays, and it tends to be—well, it
is very separate from managing liquidity, market capitalization, how that company
meets that new coverage universe, those are the factors that we look at.
BARRY HILDRED:
Can you guys just describe a little bit about the
relationship between the analyst and other functioning groups within the
investment dealers?
So, institutional sales, for example, retail, corporate
finance?
DAVID PRYOR (Research Associate, BMO Capital Markets): Well, I can
tell you that at BMO, between research and corporate finance, I mean, there’s a
Chinese wall. And, generally, that means that research and corporate finance
don’t talk. And in those rare circumstances where they do, we have compliance
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Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or
result from any use made of this transcript or any error contained therein."
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that ensures that any discussions adhere to all rules and regulations. Beyond
that, there’s not a lot more to say. In terms of institutional sales and retail, there
are extensive discussions that happen between research and those two groups,
that being for the reason that institutional sales and retail are the conduit, the
direct contact point between the ultimate clients of the bank.
BARRY HILDRED: Okay.
DUNCAN STEWART (Lead Portfolio Manager, Duncan Stewart Asset
Management): How—
BARRY HILDRED: Go ahead, Duncan.
DUNCAN STEWART: The point I was going to make — I’m sorry, John.
The current environment speaks to, just on the other question, on why you need
coverage versus, for probably even good companies, because there is no
corporate finance to do right now, and we have to get paid somehow. So, if you
just cover a good company that trades well and make good calls on it, and put
your clients first, that’s the only way you’re going to get paid in these types of
markets, so if you’re, again, a buyer starts only looking at companies that might
raise capital, then your firm would not be very successful in this—in this market
certainly.
DUNCAN STEWART: Well, I think the reason Joanna Longo may have
invited me here is that I might occasionally disagree with my esteemed
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result from any use made of this transcript or any error contained therein."
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7
colleagues on either side. As somebody who no longer works on the sell-side, I
can tell you the actual trip, done it.
Just kidding.
But it’s worth, though,
remembering that, although it’s certainly true, by and large as far as I know at
BMO and Versant, they are not the sums of how it evolved Burgess and Bay
Street or, for that matter, the world.
Corporate finance does certainly not
completely dictate research coverage, but it is one of perhaps a number of afterdeals, and I think taking what each of these guys said and coming up with a list,
you’re going to have a lot of trouble getting research coverage if you’re not liquid,
if you don’t need to raise money, if your stock isn’t about to go up, and if you
don’t fit within their reach. They’ll cover a small company that doesn’t need to
raise money, or maybe even it’s going to flatline just to have a comparable. And
I’ve seen all sorts of very good research analysts do that. Over time, they may
then go up a lot or have changed prospects, but I think you’re probably unwise to
assume that corporate finance plays no role whatsoever in research coverage.
You can take a look at heavy issuers in Canada across all industries, and they’re
better covered than companies that don’t raise money.
BARRY HILDRED: So, Tom, just—can you give us an idea of how many
companies would you guys cover in your universe where you don’t provide any
investment banking services?
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8
TOM LISTON (Director of Research for Software and IT Services, Versant
Partners): Oh, how many might? In the last 12 months, there’s only been a
couple that we’ve been involved with. I’ve only—
BARRY HILDRED: That have actually raised capital?
TOM LISTON: That raised capital, yes. Yes, so, but on average, in a
decent tech market, it could be, you know, 40, 50 percent, potentially, essentially.
BARRY HILDRED: Okay. So, just another question, again, primarily for
the analysts, how long do you follow companies before you initiate coverage? I
mean, I know there’s no, you know, absolute rule, but maybe give us an average.
How long would you follow a company before you publish?
TOM LISTON: On average, for myself, probably 12 months, maybe a little
longer than that, but it’s been anywhere from six weeks to six years, in fact, in
one case, where we sent a report, so, but 12 months is enough time to have a bit
of a track record to have them come in a few times to reside and really gain that
trust, that they’re telling a consistent story and meeting expectations, so probably
a good rule of thumb, may be potentially a little longer, but 12 months is a good
standard.
DAVID PRYOR: Yes, I mean, for us as well, it’s been anywhere between
months and years. And I think, really, what Tom is saying, and I agree with this,
the trick is when adequate due diligence which you’re comfortable with has been
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9
completed. At that point, you can initiate coverage, assuming that it’s still a
company that you want to cover.
BARRY HILDRED:
So, if we could just maybe keep it as general as
possible, and not dig into any sort of sector-specifics, which is sometimes
difficult. What’s the most important criterion in determining what companies you
guys would follow?
TOM LISTON: In my case, it’s—and not to get too specific, but it applies
to any industry. You’d have to have something unique. Technology, certainly,
you have to have something that’s different from the competitors, something that
has probably some competitive edge in, you know, maybe oil and gas or mining.
I assume it’s more, you know, type of political risk and ease of which the assets
are drawn out of the ground. And, actually, David better speak on that. But it’s
something that probably he—and, in my case, it’s something that looks like a
catalyst that will probably move the stock, you know, in—two or three times in the
next two or three years. And then, obviously, do well for our clients, so what we
look for is that upcoming catalyst in the stock that, you know, and having unique
elements to the story.
DAVID PRYOR: Yes, I mean, I think, again, it comes down to the same
sort of thing that we were talking about when you were, in one of your earlier
questions, and that’s, it’s a unique investment idea. You know, looking at mining
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10
companies is what I’m familiar with, a little bit different than Tom’s space. It’s
going to be a unique deposit, I mean, political risk does come into the equation.
With that being said, we cover companies in, that are domiciled in Canada with
operations in Canada, and also operations in countries that right now would be
viewed as having high political risks.
So, it comes down to the deposit,
management, there’s not really, you know, one thing you can say, “Oh, that is the
reason why we’re going to cover this company.”
BARRY HILDRED: Sure. When you guys are doing due diligence on
companies, you’re looking for prospective companies to follow, there’s a lot of
issuers here that spend a lot of time and money on disclosure material, other
types of communications material. What do you use as tools when you’re doing
that due diligence? Is there one specific thing you can point to? Do you, you
know, diligently read the MD&A’s, Annual Reports, etc., the combination of all?
Can you just provide some comment on that to us?
DAVID PRYOR: Well, I think the first point for us, anyways, is SEDAR,
where the company’s financials and MD&A’s are lodged. That would be—that
would be the first due diligence site. Beyond that, and you know, you’re looking
at company websites, SEDI, which is the—which shows the insider trading or
the—from time to time, industry-related websites, third-party sites.
I mean,
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11
there’s a lot of different spots, but definitely SEDAR would be point number one,
for us anyway.
BARRY HILDRED: Duncan or Tom, you have any perspective on that?
TOM LISTON: Yes, the first thing is the SEDAR, with the MD&A’s and the
financials and the quarterly filed notices to that, but primarily, the best first source
of information, especially in my sector, is go right to the customer and ask them
what they’re doing, go to their user conference, really talk to the other senior
managers within the organization, talk to the customers again, see what they
think of the product, etc., so it’s that, you know, the financials and the MD&A, and
the rest, and the AIF, is certainly very important, but the real value add, I think, is
going a little deeper than that, and going to see the—going to user conferences,
etc.
DUNCAN STEWART: One of the other areas that certainly, both buy- and
sell-siders use is web – go on Google and do a Google check on the company
name, hit the blog, hit the chat boards, hit the user groups. “No, I really hate the
software release, it crashed my computer 19 times, and I’m burning all my disks,”
that’s pretty useful feedback.
UNIDENTIFIED SPEAKER: One question I have, on that point, do you, on
the buy-side, at PM (phon) or an analyst, do you go to sites where regional
investors talk about companies? Is there any—you know, certainly, it caught the
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12
attention of some of our issuers and, you know, wanted your perspective, I
guess, on whether that’s part of the universe of things, or the spectrum of things
you look at?
DUNCAN STEWART: When I read Tom or BMO’s research, I tend to
assume they’re not lying. On bulletin boards and so forth, I tend to assume the
opposite.
But, nonetheless, they’d be a useful source of information.
I
certainly—it’s sort of like the National Enquirer and John Edwards, you know,
who would have thought that was a reliable source—like sometimes, even the
craziest news sources occasionally get the scoop.
BARRY HILDRED:
Some issuers might wonder about the value of
research, the true value of research. Once you guys have actually published
formal coverage, how do you use that firm or how does your firm use that report
as a tool?
TOM LISTON: When we initiate coverage, usually, we launch a report in
the morning, and usually 4:30, maybe 4, or the same day at 4:30, we’ll present it
to our entire sales desk and our trading desk. They’ll get a DCU (phon) on the
report, get a good understanding of why we initiated what our thesis says and the
rest of it, and within the next week, we hopefully have the company marketing
with us. Usually, we really insist on that, get the management in front of our
clients, and really have a sales guy’s pretty important for those pitches, those
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13
ideas. And, you know, printed that morning, after we launch, we hit the phones
with as many clients as possible and really try to say, “Here’s a unique idea we
have, here are our best (phon), and thesis, here’s why you should buy,” and
selling what have you, right away. So, and those reports that stay current, I’ve
asked for reports from four years ago, in some cases, because they want that
background on the industry, which for me has not changed that much, or at least
one of the contacts (phon) to the history of the company, so they do, because
you still use it even many years later, the initiated coverage report that it—
DAVID PRYOR: And, it’s a pretty standard need (phon) for us, we tend to
do the 4:15, 4:30 the night before, educate the desk just as Tom said, and then
launch the next morning, in the morning call. That report goes out to the sales
desk, and the IA’s on the retail side then use that for the basis of investments to
introduce to their clients. I mean, the other thing is that that piece of research at
BMO is also posted on our intranet so that other business departments can
access that and use that however they see fit. Finally, the other – the other point
is that, you know, Tom’s research or ours is often picked up by third-party news
sources, too, where you can get excerpts, in some cases the whole thing, and
read it. Bloomberg would be able to get, or Reuters would be a great example of
that.
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14
DUNCAN STEWART: And, of course, the buy-side uses research in a
very different way.
For example, it depends whether or not I’m training my
puppy. I thought that was funny. No, there’s a whole lot of people on Bay Street
that might not use research reports. They always do their own due diligence,
and they never ever read the broker’s stuff, and they also lie like rugs. There’s
absolutely no way that, as a fund manager, you can possibly pretend to be
investing your client’s money. Well, then, maybe you don’t rely on the other
people’s research, but you at least have to know what they’re saying. Everybody
on Bay Street reads everybody else’s research, more or less, compulsively. One
of the other things in certainly the time I’ve been observing, this is more true, of
course, of small cap issuers than large cap because they always have research
coverage at the big end. Small cap ones, I’d say there is, and guys, I’d be
interested in your thoughts on this, probably a 10-20 percent premium on a public
company that is covered by a reputable institutional research firm, just as, I’ve
always, as a fund manager, I will almost never buy a company that isn’t covered
by at least one firm.
TOM LISTON: Yes, no, I have no idea what the number is, but there’s
definitely a premium, I would hope. And I do think—because we screen—I think
it might come up later, but we screen 60, 70 stocks and watch them consistently.
So, hopefully, those stocks that we pick are the cream of the crop, and there’s a
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15
reason why we picked those stocks, so there should be a bit of a premium on
that.
UNIDENTIFIED SPEAKER:
Yes, no I would have no idea what that
premium is, but I would agree.
UNIDENTIFIED SPEAKER: Minings will?
UNIDENTIFIED SPEAKER: Oh, absolutely.
BARRY HILDRED: So, now that we’ve heard sort of how you guys as a
firm use the research report as a tool, we often get questions from issuers about
how they can use the research report from an analyst. And, maybe just for Dawn
and Craig, a question, is it ever appropriate for an issuer to use an analyst report
as a marketing tool such as disseminating it probably to shareholders, posting it
on their website, etc.?
CRAIG ARMITAGE (Vice President, Equicom Group): The simple answer,
I guess, is no. I mean, there’s a longer answer—
DAWN WHITAKER (Partner, Ogilvy Renault law firm): No, I—no, I don’t
actually think the answer is “no,” I think that it’s “Yes, you can use it, but with a lot
of precautions in place and use it, you know with a plan in place.” You know,
generally speaking, I think the TSX is less keen on its members using analyst
reports as marketing. The SEC has just come out with guidelines for a website
disclosure which includes an acknowledgement that linking to a third-party
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16
analyst report is the reality in the world and that’s okay, and they actually use the
words that those third-party links can enrich your website and make it more
useful, can actually provide meaningful information to potential investors, and
other analysts, and other, you know, media. I think the key thing is, the legal
counsel, we’re always sort of the negative spin on things, but I don’t it has to be
negative, I think that you can use analyst reports in a positive and useful way for
your company just as long as you follow the rules.
And then, of course, there’s a whole set of rules, and I promised I wouldn’t
start quoting rules and sections, and things like that, but I mean, they’re pretty
common sense rules. You have to be balanced, so if you have negative analyst
reports and positive analyst reports, which most companies would, then you
need to make sure that you link to all of those analyst reports. If you’re going to
disseminate analyst reports, probably the best way to do it is to link it to your
website, make sure you identify it as third-party reports, that they’re not your
reports, but they’re—the date of them, that type of thing.
I wouldn’t—my
personal view is, I wouldn’t mail them to sort of select people or even all of your
shareholders because you want to make sure that the entire universe of people
who are interested in your company get to see all of them. So, you don’t want to
do selective mailing. I think that generally starting to link them in that, writing
your website, there’s a bunch of rules and the SEC guidelines involved and the
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17
TSX Electronic Communications Disclosure Guidelines, that talk about how you
identify these things, make sure that they’re not framed so that they look like your
disclosure as opposed to someone else’s disclosure. And then, again, just the
bottom line is make sure you’re balanced, you can’t pick and choose. Don’t take
excerpts out of an analyst’s report that you like and discard the part that you
don’t like, you know. Don’t—obviously, don’t recap it or change it. You shouldn’t
manipulate it in any way. So, be fair, be balanced, be wholesome, don’t omit
things that are important.
CRAIG ARMITAGE:
I would just add to that, obviously, I mean, and
production, like with respect of the sell-side guys here, what’s your view on
companies using your research in that way?
You’ve at least preferred that
there’s some dialogue before your—where it’s linked to their website?
TOM LISTON: Personally, I’d rather not because a lot of times what will
happen, and I’ve seen it before, there’s aged research on the change review and
they haven’t probably updated it. I’ve seen a firm send out, I’m just referring to
guys like me, so there’s nothing to hide, but it didn’t make sense, and then,
certainly, sending it to retail as well, and specifically with us, we don’t have a
retail network and you ran out of retail guys calling you, and, you know, you just
can’t answer all those calls and you’re not supposed to answer all those calls.
So, I’d rather have control. If there’s a client that wants our research, I will send
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18
it to them, talk to them, and then we’d have that dialogue to make sure they
understand all the pieces of the reports, too, right, if there’s something that’s,
maybe they’re not quite clear on, they can talk to me and we’d have that dialogue
directly rather than, you know, being sent out there and—
UNIDENTIFIED SPEAKER: Yes.
DAWN WHITAKER: If I could just, I mean, that’s the problem with giving
legal advice because there’s always 12 exceptions to every exemption and
everything else. One thing to note, that if you are going to link to analyst reports,
be sure you have permission to do so.
UNIDENTIFIED SPEAKER: Yes.
DAWN WHITAKER: Because these guys will tell you, they work hard on
their reports, and they sell them for money, that’s their business.
So, just
because you subscribe to it doesn’t mean that you have the right to post it out
there to the public. So, there’s copyright issues, you need to get permission.
Even if it isn’t copyrighted, probably a good idea not to tick off your analyst by,
you know, putting these things on the website. You might want to talk to him or
her first.
DAVID PRYOR: Yes, and that’s exactly what I was going to say is that,
you know, at the end of the day, our views are the same as Tom’s, that that
report is the property of our firm, not of the company we’ve initiated coverage on.
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19
And, you know, the other issue, and even Tom eluded to, of the retail getting in
touch with you, I mean, they don’t have a retail network, we certainly do, and I
mean, now you’re getting into the whole “know your client” rule that the company
has to be mindful of as well.
BARRY HILDRED:
And so, you touched on it earlier, Tom, I’ll just
probably ask Tom and David, how many companies do you actually publish
research on, and how many companies would you estimate that you follow on an
ongoing basis?
TOM LISTON: My number’s 12, technology’s a little harder because it’s
fairly—each company’s fairly unique, there’s not as many synergies between us,
like maybe oil and gas and mining, so maybe oil and gas and mining’s probably
more in the 15+ range. And I think that it’s chequed in, 64 on my radar screen
that fairly I actively watch news and such.
DAVID PRYOR: We cover 12 as well right now, and we, in terms of the
numbers of companies that we follow relatively closely, it’s in the dozens, I would
hazard a guess, somewhere, north of 50, and companies that we follow
periodically, it would be well over a hundred.
DUNCAN STEWART: Probably worthwhile to add here, just what the buyside tends to follow, at any given time, very, very concentrated managers
probably own as few as 25 bids (phon), there may be five guys like that in
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20
Canada. The average would be closer between 40 and 80, that’s owned, the
number followed would be roughly, in order of magnitude, greater.
So,
somewhere in the close order of 200-400 companies, where you would have that
within at least once in the last year maintain a file. You may not maintain a
model, but you certainly have some familiarity with the file.
BARRY HILDRED: So, for both the buy and the sell-side here, just, as an
analyst, when you’re looking at a company, what are some immediate red flags
that come to mind when you first meet a company? Can you just give us an
example, immediate turnoffs?
TOM LISTON: When the company tells you how much they’re worth.
BARRY HILDRED: Oh, she’s going to stop (phon) you?
TOM LISTON: That should, they’re doing one job that we do, so, you
know, you can compare maybe a little bit, but don’t try to come in, of what your,
were worth, again, that’s again one thing that we do, hopefully. You know, and it
probably applies to a few sectors, but, you know, just saying how massive the
industry is, $3 trillion and all you need is 1 percent of it, not really explaining the
micro and how you’re going to build that out, how you’re going to gain that share.
“It is such a big industry, we just have to be there, and we’re going to be a
$300 million company,” stuff like that, and those are probably two of the bigger
ones.
And then, one other one is in insider ownership, whether, you know,
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21
there’s not much insider ownership, relates to the question on value. “So, if
you’re such a great value, why aren’t you buying stock?” And that sometimes
stumps a few companies, so those would be the big ones.
DAVID PRYOR: “I don’t tell everybody this, but we’ve got a press release
coming out next week.”
Yes, and being open to promotional, inconsistent
disclosures, talking about how you’re going to get bought next week and that
your stock is unbelievably undervalued, unrealistic growth expectations, I mean,
it’s a pretty standard list of things that I think that lack—
BARRY HILDRED:
So, turnoff is those issuers that are trying to be
solicitous in their approach, they’re trying to sell you guys.
DAVID PRYOR: Yes.
DAWN WHITAKER: You’d have some legal problems with some of those
too.
BARRY HILDRED: I’m sure you do.
DUNCAN STEWART: Barry, can I add one here? It’s not one generally
discussed. It’s a trivial one, but it drives fund managers, at least that I know,
crazy.
Don’t give me nine-month cash flow statements and balance sheets.
Like, if you have a quarter, give me a 3-month versus 3 months at a time. Also,
don’t give me a presentation that doesn’t have the financials in it. Always, that’s
usually I find that the reason you’re doing that is so that I can’t do the math in my
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22
head and figure out that you’re hemorrhaging cash. Guess what? If you don’t
give me the number, I’m going to bring out my calculator and figure it out.
BARRY HILDRED: Just, this question may be more relevant to Duncan,
but, you know, certainly if you have other perspective, I’d like to hear it. Should
issuers ever pay for coverage? A lot of small companies, they sort of grapple
with this idea that we don’t have any sell-side interests, should we go out and
pay a third party to actually publish research on our company?
DUNCAN STEWART: So, the answer to that has changed my view over
time, but only because I sort of learned. Years and years ago, I never read paid
for research. Then, I read about it, I figured Kemper, if you’re in front of me,
maybe they’ll be some useful stuff in it. After four or five years of doing that, I
never found a single piece of them of any value whatsoever, so I stopped reading
them. That’s just my own experience, maybe others may find value.
BARRY HILDRED: Okay. I won’t ask Tom and David. Another question,
this, you know, tends to lead into further, more complex areas, into longer
discussions, but in many cases, issuers that don’t provide guidance are
struggling with how to properly manage their analyst, if you will, manage
consensus, so helping analysts construct models and in making forecasts.
Sometimes analysts have expectations that are much too high, much too low,
when they’re compared to internal management forecasts. What advice would
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23
you give the issuers that are struggling with guiding their analysts? And then,
you know, maybe an issuer that has an outlier that’s distorting consensus?
DUNCAN STEWART: It’s happened quite a few times in the last year, in
my sector anyway, the first point, you might be able to get enough key
performance indicators or some of the data that makes it fairly simple for the
analyst to build up to, and certainly they’ll have their own views on things. And I
think the only other way is give guidance, give it in a wider range, but (b), there
might be a way that you can have a company say, “Look, why, you know, here’s
what we said, publicly in the conference call, here’s what’s in our financials,
here’s the last three quarters, here’s what’s going on with our competitors, you
know, why would you have us growing at 20 percent?” At least that sort of puts it
on the analyst to defend why they have a 25 percent growth rate when all these
competitors are growing at 10 percent, or what have you, and make them come
up with an answer. I mean, at the very least, you can tell your shareholders
when they ask why so and so here that, you know, this is what they’re thinking,
you know, and try to point to the other analysts that are more within a reasonable
range, but, that might be the way they’d try to point to your analyst but, you know,
“At least tell me why you’re so incredibly bullish beyond what other guys are
looking for. Here’s all the numbers we presented, you know, how are you getting
to these numbers,” and that might help. But, you know, all told, why don’t, you
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24
know, you give that in the first place and maybe get a wider range if you’re a little
bit more, if you’re not as comfortable.
TOM LISTON:
Or even just a more transparent disclosure on their
performance indicators or their business prospects because if it’s murky or if it’s
a thin disclosure, then you—then that’s quite often resulting in having a wider
disparity of analyst estimates.
BARRY HILDRED: So, the more information they’re providing, the more
accurate the analyst is to pinpoint that number?
TOM LISTON: Clearly. Sure.
DAVID PRYOR:
I think sometimes the information is actually in your
disclosure, and if it’s not and you question the assumptions, then, and it may look
to the standard, and hence the disclosure to deal with that.
BARRY HILDRED: Okay. Dawn, do you have any perspective, or can you
just comment at all?
DAWN WHITAKER: Well, I have—just to emphasize the point that’s been
made is that there may be outliers or there might be differences of opinion,
you’ve got to go to the cause of that, and clearly, part of the cause is it’s probably
in your own disclosure as opposed to the fact that the analysts are way out in left
field somewhere. So, you’ve got to take a look at your disclosure and make sure
that it’s clear.
I mean, that’s something that the securities regulators are
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25
constantly on issuers’ case about it, the fact that the disclosure, it’s not clear
enough, it’s not wholesome enough, it doesn’t cover all the bases, it’s, you know,
that kind of thing. So, that’s the practical issue. I guess, from a legal point of
view, which everyone should know, is that, clearly, you can’t give information to
an analyst or anyone outside of the necessary course of business that is not
publicly disclosed. So, if you know something that the rest of the world doesn’t,
you can’t go and say, “Hey, Alex, I’m going to tell you a secret and that’ll make
your, you know, your models correct.”
And if there’s a real problem with
something in terms of an analyst’s expectations, then you’ve got to point them in
the right direction in terms of their previously publicly disclosed information. If
there’s a—if there’s a period, a dirth of information or there’s something that
they’re missing, then you’ve got to think about either keeping quiet and riding it
out, or you’re going to have to disclose it to the public generally and then to the
analyst. You can’t selectively disclose, I know everybody knows that, but that’s
really important, and it’s something that lawyers get very nervous about, is where
there’s one-on-one conversations with somebody about financial analyses that,
you know, there’s all sorts of (inaudible) and a lot of guidelines, in terms of
making sure that there’s more than just you at the conversation, that it’s a
discussion in advance, make sure that you can point to every single place that
it’s in your public disclosure.
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26
BARRY HILDRED: They’ll try to be the practical, which is, you know, you
have an outlier that’s driving up consensus and you miss it, which is going to be
a missed expectation in the marketplace, is there any ownership or responsibility
that an issuer takes for third-party research?
UNIDENTIFIED SPEAKER: Well, I think beyond the factual accuracy of
the information in the report, no, I mean, the opinion and the interpretation and
the conclusions are that of the analyst, not of the company, and they know that
when we look to initiate coverage, we’ll send a draft of that report to the company
for review minus all of the opinion, minus the conclusion, minus the valuation.
None of that appears, it’s just the facts, that build up the factual accuracy of that
report, and beyond that, you know.
BARRY HILDRED: What about companies, Dawn, that want to publicly
react to it?
DAWN WHITAKER:
Well, in terms of the strict legal answer, no, you
don’t—you, clearly, you don’t own an analyst’s report. You have to, going back
to my earlier comments, make sure that you don’t acquire ownership for the
disclosure by mischaracterizing it on your website or some other kind of place
like that. If, following discussions with an analyst, if you choose, where you’re
disclosing public information and you still haven’t been able to resolve your
concerns with it, in an extreme circumstance—and I wouldn’t recommend this
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27
without careful, careful consideration—you might consider putting out your own
press release, I’m not sure if “refuting’s” the right answer, putting out your own
information which could draw an investor’s conclusion in a different direction.
Again, you have to make sure that to follow the previously publicly disclosed
information, you wouldn’t want to do that without thinking carefully because
you’re really getting into a public forum where you’re going to be seen to be
fighting (phon) with an independent analyst, and I’m not sure how much value
there is in that from an investor relations marketing promotional point of view.
So, I would only suggest it in a very extreme circumstance, and you’d want to
look at that press release very, very carefully and, for sure, get your legal counsel
involved.
BARRY HILDRED:
Okay, Tom and David, do you ever issue sell
recommendations?
TOM LISTON: Yes. Yes.
DAVID PRYOR: We have.
TOM LISTON: Yes.
BARRY HILDRED: And—
TOM LISTON: They’ll speak to trying to gain credibility with the buyer’s
side, and they—you have to have a few sellers to push them towards a buy,
right, if everything’s a buy, then how do you generate trade from that idea?
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28
DAVID PRYOR: Yes.
BARRY HILDRED: Why do analysts stop covering companies?
DAVID PRYOR: It could be a number of different reasons, I mean, the
company could be acquired, there could be a liquidity issue, there could be the
analyst who’s covering that, that particular company may leave the firm, he could
change his research coverage, I mean, if Tom all of a sudden started covering a
completely different sector, then perhaps some of the companies under coverage
wouldn’t be covered for a period of time while they went to fill that hole. There’s
a number of different reasons why.
DUNCAN STEWART: Or, the other one would be management credibility,
so if management lost their credibility with the—you certainly could have sour
conditions for awhile, but often we’ll have a sour condition for awhile, and
eventually just drop coverage.
DAVID PRYOR: You could also move out of your target universe, too, I
mean, if you grow too small, too large, a variety of different reasons.
BARRY HILDRED: After an initial presentation, so you’ve seen the issuer,
you have any understanding of their business, the company’s coming back some
time later to update you guys, what sort of information do you look for in those
meetings? What sort of presentation do you want to see?
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l’utilisation de ce texte ou toute erreur qu’il contiendrait. »
29
TOM LISTON: Sure. For me, it’s simple, like you just pull up the last
presentation and basically question them on all the key metrics or goals that
they’ve had when they came in last, and basically test them on how many they
met, why they missed, etc., etc., and rather than go through the whole pitch
again, really just touch on a few points from the last meeting on promises they
made, etc., and walk through those issues.
DAVID PRYOR: That’s exactly how we deal with it, too.
BARRY HILDRED: What advice would you give the issuers that are trying
to gain the attention of analysts?
DAVID PRYOR: I would say that the number one piece of advice is to
focus on communicating and executing your business plan, and that’s, it sounds
very simple but you’d be surprised how many companies don’t take that to heart.
You know, be proactive in terms of disclosing material changes to your business
when they happen, and be as transparent as you possibly can with your public
disclosure.
TOM LISTON: Yes, I would echo that statement.
DUNCAN STEWART: Well, I have a different one, and the worst of both
the buy and sell-side, and hopefully, this will justify all the (unintelligible). It’s the
relevancy tactic. If you notice that a buy-side portfolio manager owns, I’ll pick
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30
randomly a name that may be covered by either of these guys, you know, a
mining company, a—are you gold, or juniors?
DAVID PRYOR: Juniors.
DUNCAN STEWART: Like Sherwood Copper?
DAVID PRYOR: We don’t cover it, but—
DUNCAN STEWART: Okay, just like that, or open cash (phon). So, if you
come into either of these guys or a sell-side analyst, or you come into me, you
say, “Duncan, I noticed that on BNN last week, you said you liked this name. I
compete directly with your company,” or “I am in the metallurgical play besides
your company, I am in the software space and I may be acquired by your
company,” I’m not, you know, leaking (phon) ways, just going, it sends up—well,
know, it would have, is a constant acquirer and therefore, you know, I could have
some (unintelligible). If you tell a sell-side analyst, that (unintelligible).be extra
information and they can work it into their next report. If you tell a buy-side
manager that—remember, I cover hundreds and hundreds of companies. I have
no time to think about new ones, but I do care very intensely about the names I
already own. And if you say, “I have information that may be of relevance to you
from a competitive aspect,” I’m always delighted you will, I would say 100 percent
of the time, get a meeting on me if you simply know what it is I already care
about either on the buy or sell-side.
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31
DAVID PRYOR: Sure.
BARRY HILDRED:
What’s the—is there a right number of analysts
covering the company?
DAVID PRYOR: I would say, I mean, no. I mean, we, I mean—
BARRY HILDRED: The more the better?
DAVID PRYOR: Well, we really don’t pay attention to the other—to how
many analysts are covering, in the companies we have under coverage, so—
BARRY HILDRED: Do issuers treat all analysts equally?
DAVID PRYOR: Yes, of course, he does.
BARRY HILDRED: Do they?
DAVID PRYOR: Do they? Absolutely not.
BARRY HILDRED: So, they should return the phone calls from the guy
that has the seller recommendation?
TOM LISTON: And it still is that, it still goes on today, that they don’t.
DAVID PRYOR:
I mean, I think it’s a flawed long-term strategy, we’d
certainly seen enough situations where, you know, you can get a sell
recommendation to a hold, a buy, sometimes it’s through delivering on what that
analyst wants you to deliver on. I certainly also think you want to avoid any
perception of selective disclosure, meaning one analyst will say, “I had a
conversation with management up at their plant, and this is what I learned.” And
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32
the other guy reads it and says, “I have no access to that information,” or, you
know, “They didn’t even make that available to me,” so I think you want to avoid
that, and then, again, I think over the long term, it is a relationship, and
sometimes you do have to respect a different point of view, I think, you know.
BARRY HILDRED: You mentioned, Tom, earlier that, you know, part of
your due diligence is talking to customers, you know, actually doing some
industry diligence. Is it important for companies to have analyst days, is that an
effective tool in communicating with analysts?
DUNCAN STEWART:
It’s the easiest way to deal with your previous
question, right. So, then you have, you might have all the analysts one day they
all would share the same information and offer the same customer fee.
Obviously, we want to go speaking to a customer that no one else will talk to, but
the analyst day, the best way to deal with all those type of issues that you just
mentioned.
TOM LISTON: Sure, and analyst days and site visits, and it just, it helps
with its buy or sell-side, the analysts develop a better understanding of the
company.
I probably need to add a quick caveat.
Probably dependent on
market capital liquidity, no offense, if you’re a really, really small company and
covered by true analysts and three institutional investors, you’re not going to get
much of a crowd even if they all show up, and they won’t, so you know, if you’re
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33
going to fly somebody across the world, it needs to be a certain, probably a
certain critical mass.
DAVID PRYOR: Yes.
BARRY HILDRED:
Okay.
Just another big topic, it’s a point of
conversation, and there’s been a number of panel discussions about it, so I
won’t—I don’t think we should spend too much time on it, but I thought I’d throw it
out there, thoughts on guidance. Companies providing guidance, should they,
shouldn’t they?
TOM LISTON: Yes, I think I said earlier, I’d, especially when you have the
divergent view that you point out, and then divested by the bank, if it’s not
encouraging your business, just increase the range of guidance, but at least
captures and, what will happen is, it’s uncanny to say, all this consensus it will be
at the midpoint of guidance 90 percent of the time, so you can kind of almost
coax the analyst into that, you know, that number almost by giving a range, so,
again, if you’re a little encouraged, give a wide range, at least gets somebody in
the box. You have to update it constantly if things change, but I think it’s good
practice and do it on an annual basis, and do revenue and either EBITDA and/or
cash flow depending on the industry. Don’t do EPS, there’s too many moving
parts in GAAP, never touch it. EBITDA, just EBITDA, and revenue.
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34
BARRY HILDRED: If there’s volatility in the business, though, and you
continually revise, does it make the issuer look like they don’t understand their
business, they don’t know their business?
TOM LISTON: If there’s too not much volatility, yes, you’re probably better
off not giving it.
DAVID PRYOR: But it really depends on the number of factors that drive
the financial and operating performance of the business, too, and if there are,
you know, systemically and inherently are a wide number of factors, then
guidance may be a very good suggestion, and if there are factors that are
beyond the company’s control that will impact that guidance, I mean, specifically
commodity prices, for example, and have no way of controlling that, and that
could very easily impact the type of guidance that a company gave a month-anda-half ago and it’s changed dramatically now.
TOM LISTON: Well, in that case, just give the production guidance.
DAVID PRYOR: Absolutely, yes.
TOM LISTON: Use the production guidance.
DAVID PRYOR:
And to note, roughly twice as likely to invest in a
company that does give guidance versus one that doesn’t.
BARRY HILDRED: Okay. Dawn defaults.
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35
DAWN WHITAKER: Yes. So, this is where the—that side of the table, or
this side of the table. I mean, I know the practical reality is that, you know, some
people need to give guidance to attract coverage. Legal counsel really don’t like
guidance, it’s sort of profit risk, there’s new laws in place in the last couple of
years that require you to have all sorts of cautions involved in terms of giving
guidance. You can’t enter into this lightly once you’ve stepped into it, you’ve got
to stay in it, you can’t just decide to give guidance, you know, this quarter and
then not again next quarter and then maybe next year, back and forth. I think,
basically, you need to know that once you do give guidance, you’re going to be
liable for it. You need to include the right disclosures relating to it, cautions, you
have to make sure your assumptions are reasonable.
You can’t, obviously,
manipulate the market with your guidance; in other words, you can’t, you know,
put out guidance that’s low so that when you beat the market, everybody’s, you
know, happy about it. So, there’s negative and positive issues there. And as
someone said, you’ve got to be updating it, if it turns out that actual is, there’s no
relationship to your guidance, then you’ve got to update it or withdraw it, which in
and of itself is a big issue. I mean, it’s just—there’s a lot of legal issues in
guidance. So, I guess the bottom line there is, if you need to do it, do it but be
careful with it and follow the rules.
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36
UNIDENTIFIED SPEAKER: I would just add quickly, I think, we deal with
companies you sometimes think it’s a quick fix, like my competitors do it, I have
to do it, without looking at some of the other components that could enhance the
understanding of your business and get people to model the company more
accurately, which could be your disclosure. So, there’s no one answer, I think,
that fits for every situation, but I think we see companies that are too quick to, I
think, make that judgment, and they don’t think about the long-term implications
of it, you know, meaning next year cannot look as rosy, and we’re faced with
having to revise guidance or go downward, or, you know, and—
DAWN WHITAKER:
Yes, someone who’s constantly coming out with
downward revisions, it probably would have been better prevention to avoid that
altogether.
BARRY HILDRED:
Given that we’re 45 minutes in, do we have any
questions from the audience here in Toronto, or any questions from Vancouver,
Montreal, Calgary? Be happy to take any questions that any of you may have.
James?
JAMES: What makes an analyst more credible with the buy-side?
BARRY HILDRED:
Duncan?
What makes a sell-side analyst more
credible with the buy-side?
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37
DUNCAN STEWART: Let’s see, do a really quick top buy. So, Wood,
StarMine, etc., rankings do matter. One-on-one contact, and them talking to me
and providing me accurate information. One of the big ones is just word on the
street, everybody knows who’s hot, who’s cold, who has credibility, who’s well
respected. I can’t come up with five, but those are a good three.
BARRY HILDRED: Any other questions here, or—?
JOANNA: I have two questions. So, when, just for some of the issuers
who might not know what a typical analyst’s day is like, tell us what your actual
day is like? So, you’re at the office at what time in the morning? What can you
do? When do you put out your research notes? You know, like do you spend,
how much of your day is actually meeting with issuers, and how much of that day
do you spend doing research. And then, is it typical that every day you’ll have a
meeting with the desk at the end of the day? Those sort of things, what’s your
typical day like?
TOM LISTON: Well, I mean, from my perspective, I’m usually at my desk
by about 6, 6:15, a little bit earlier than some of my colleagues in my office. It
starts off with reviewing the newswires from the night before, obviously, seeing
some of them before I leave home. Trying to put out our quick notes before the
market opens so the desk has got a chance to digest them as well as our clients,
and once that’s done, I mean there’s no typical day because just when you think
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38
you’re going to devote two or three hours to doing one thing, a company that you
have under coverage, eventually issues a press release, you’ve got to respond to
that and maybe you’re updating a model, I mean, there’s certain times of the year
that you’re busy with earnings season, so—
BARRY HILDRED: Or there’s some day Lehman goes bankrupt.
DAVID PRYOR: Yes. But beyond that, there’s no really structured, you
know, “This is what I do from 12 to 1, then 2 to 4,” you meet with the desk, you
should talk to the desk all the time because, again, they’re the conduit to the
clients for BMO.
TOM LISTON: Yes, the only daily structure is, I’m in a bit later because I
don’t feel like overseeing the commodity prices, but about 6:45, you know, every
morning, we meet at 7:30, which I think it’s fairly common on the Street. And
then we present our ideas with the other research team, hopefully in order of
importance, and really pitch them on the really short bullets, you know, five or six
really tight bullets on what that news item means. So, at 7:30, 8’ish, and then the
sales team and trading, you know, get on the phone quickly, we’ll do the same
thing usually if there’s no other news coming on that day to our clients, to keep
them up to date. And then, through the day, it’s all is about usually you’ll meet
with probably one company a day. But, otherwise, you’re just reacting to the
news flow in the market, and working on new research projects.
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39
BARRY HILDRED: You knew of one company, Dave, that—
TOM LISTON: Yes, doing a lot less of that nowadays, but thereabouts,
yes.
DAVID PRYOR:
Yes, it can vary, and I think that’s a pretty standard
average, but, I mean, it depends on the industry you’re covering and, you know,
is there a conference in town, and if there is, you’re probably meeting from, you
know, 9 ‘til 6 or 7, I mean, you’re meeting companies constantly, so, but on the
average, it’s probably—
BARRY HILDRED: And how many pitches would you give, Duncan, a
week?
DUNCAN STEWART: Well, I mean, my side is, is different hours which
accounts for why I don’t work at these guy’s side of the street anymore.
Probably, number of pitches would be, it does depend on the intensity of the
market, but certainly it is at least more than one a day. One of the other things
that we haven’t mentioned so far is the need for, on that, we always have these
guys go out marketing all the time.
So do we, we need to bring money in,
especially if we’re in the mutual fund side, hedge fund side. We do a lot of
marketing. We don’t admit it because of course, it makes it sound like we’re not
actually thinking about what to buy and sell, but it’s incredibly important. We’ll
often, especially, during RRSP season be out of the office for, in February—
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40
January and February would not be unusual to be gone, of those nine weeks, to
be gone four or five of them.
BARRY HILDRED: Joanna, another question?
JOANNA: No, just Tom had touched upon, especially in these markets, so
in these markets, what can issuers expect is a good time for issuers to come to
town and do a road show? You know, like how, you know, how happy are you to
look at new stories at this point, and do you feel pressured at this point to not be
taking meetings, that, you know, just hoping not going to be a banking
relationship with in the near future and that you’re probably taking the meeting
more on just out of interest but not really seeing a big future with it, I mean, do
you scale back on those kind of meetings in these markets?
TOM LISTON: Yes, if the hurdle’s gone up and then they could have, guys
like Duncan, the market cap restrictions have fairly been pushed in this type of
market, and no one wants to really see much under a hundred million market
cap. However, if there’s enough of a hook in the story, we’ll definitely see it
because you have to set the bar now, they had to cut their guidelines and their
goals now so they can measure it over the next year. So, I’ll definitely take a lot
of those meetings still, but the bar in terms of the quality and/or market cap has
certainly gone up over a lot, a few months, for sure.
BARRY HILDRED: If any—
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41
TOM LISTON: I’d still encourage it because, you know, most people are
doing as much, but they’re probably not going to get as many calls these days,
because everybody’s sort of in paralysis mode right now, so, still trying to go in
the show, or run a road show because you might actually, you should probably
be having meetings there, you did get in this market.
DUNCAN STEWART: And also, it’s conversation, right, it’s not a single,
you walk in and buy like you pick up milk at the store. It’s an ongoing dialogue,
so there’s a term that everybody on the buy-side knows but we don’t always tell
issuers, which is what we call a “pity” meeting, which is your in town and you call
up and say, “Please meet with me, I’m in Toronto and I only have one other
meeting.” And you go, “Okay, fine.” And you do it, and you learn something
useful. And you don’t buy that day, but six months from now you do, and a year
from know you’re an over 10 percent shareholder, because of a conversation
that’s been ongoing and continuous.
BARRY HILDRED:
Craig, do you have an example maybe you can
provide us with, small cap issuer, was successful in attracting that analyst
coverage over time, what were some of the tactics that were used to achieve that
analyst coverage?
CRAIG ARMITAGE: Yes, I mean, it’s a good segway, and it is definitely a
progress, and it was interesting to hear the time it takes to actually achieve or
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42
retain analyst coverage. It’s a lot longer than I think some people think. We
have a software company we’ve worked with for quite a number of years, and
you know, they went out and I think delivered a very clear vision, delivered a road
map, you know, three to five-year road map, talked to people about the
milestone. And they were very visible, they came out, you know, through good
quarters and bad, which I think is important whether it’s a bad market, generally
your business is not performing, I still think it’s important to reach out. They did
that, they took the feedback, they got the people like Tom and enhanced their
disclosure to make sure people could understand the business and see the
drivers, and ultimately they delivered. They didn’t deliver on every point, but they
gained the credibility and the trust of the street. And, you know, it was a lot of
work, and now they have nine analysts covering the company.
BARRY HILDRED: And to that point, for the guys in the middle trust,
credibility of management, how key is that?
TOM LISTON: Absolutely.
BARRY HILDRED: So, are there any other questions? Or, should I give—
?
ALBERT: Can you hear Albert?
BARRY HILDRED: Okay.
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43
ALBERT: From Vancouver. Just a question on the market cap. You
mentioned a hundred million market cap, and I just wondered maybe if I could
ask there, what would be the minimum you’d look at and what would be really the
sweet spot that you guys like as a market cap threshold?
TOM LISTON: So, you know, our firm particularly, we’re not in any need,
but a little bit different than to BMO, we tended to be more 50 million to a billion
than market cap, they’re a sweet spot, we definitely cover some, like top names,
but we tend to be more in the small and micro cap end, we’ve obviously moved
up a little bit in this market, and it’s really again, in response to what the buy-side
is buying right now, and some of them have either a very strict threshold or a
loose threshold around a hundred million. Again, once in awhile, they’ll be, in
this market, maybe a 50 million or such, and if there’s deep liquidity in it, we’ll bet
on it early, we’ll may even cover it earlier than normal because we want to be
there throughout and when it does, we think it’s going to hit about a hundred
million or more, and then gain that audience, we’ll be there, we’ll be the first out,
we’ll make a good call, etc., but it’s definitely a higher bar in this market.
DAVID PRYOR:
Yes, and I only speak to the junior exploration
development station of mining sector and that’s, you know, by definition, the
companies aren’t going to have multi-billion dollar market caps, generally. So,
for us, you know, a couple hundred million dollar market cap would probably be
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Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or
result from any use made of this transcript or any error contained therein."
« Bien que Groupe CNW ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. Groupe CNW ne
peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à
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44
about right. That being said, you know, would we, we do look at and follow
companies that are significantly below that if we think the story’s interesting and
it’s got some legs. But I probably need to add a little bit of a reality cheque, and
then you guys can contradict me if I’m wrong. Something like 70 percent of Bay
Street will not meet with you if you have less than $100 million market cap and
something like 98-97 percent of the available dollars, both in Canada and
worldwide, will not meet with you if you are under a hundred million dollars. Any
rough disagreement on that?
DAVID PRYOR: Yes—no, I would actually disagree with that, I mean,
again, it’s by virtue of the space that we look at and, you know, the junior mining
space, a lot of those companies don’t have market caps below that. So, again,
that’s specific to what—to the area that we look at right here.
BARRY HILDRED: Okay. Any other questions?
HOWARD:
A very quick one from Howard.
BARRY HILDRED: Okay.
HOWARD: Can you hear—can you hear me okay?
BARRY HILDRED: Yes.
HOWARD: If I had a company that had a criteria that was just discussed
both from the analyst and the buy-side, do either of you care that this offsets, a
nonventure, the TSX, does that factor into any decision?
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Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or
result from any use made of this transcript or any error contained therein."
« Bien que Groupe CNW ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. Groupe CNW ne
peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à
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45
TOM LISTON: No.
DAVID PRYOR: Not from—
BARRY HILDRED: It doesn’t matter?
DAVID PRYOR: No.
DUNCAN STEWART: Pink sheets, I won’t invest in pink sheet stock.
BARRY HILDRED: Okay, just no pink sheets. Any other questions?
UNIDENTIFIED: I have a question. I just want to comment on the fact, the
question of, earlier about too much coverage top floor (unintelligible) my future
company (unintelligible) and reached the saturation point, and probably
everybody else I talked to told me (unintelligible) issue (unintelligible), and I said
well, I can’t bring anything new to the story. So, how do you address that?
Yes, I don’t, how you address it, I—depending on the story, I’d probably
disagree. You know, one of the stories, I think there’s 18 now covering it, and I
think I recently brought some very big aspects to that story. So, you know, you
just have to work a little harder. I definitely prefer stories with less analysts
because you’re going to get more marketing dates from them, you’re going to,
yes, have less competition, so a little eager to be differentiated than your peers,
but, yes, I don’t know what a company can do to—you can’t really discourage,
you know, from coming in per se, but I think even well-covered stories, you can
have a different angle if you really dig.
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Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or
result from any use made of this transcript or any error contained therein."
« Bien que Groupe CNW ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. Groupe CNW ne
peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à
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46
BARRY HILDRED: Yes, finding the right number, I think, would be difficult,
but certainly, if you have, you know, a small handful of analysts covering you,
bear in mind, you know, the street is pretty, I don’t want to say transient, but fairly
mobile, so you may have two analysts that, you know, quickly move on or move
to other firms taking in responsibilities and, you know, you can use your—lose
your coverage fairly quickly as well, so something to bear in mind.
DUNCAN STEWART: Although, remember, as a fund manager, I own 60,
80 names. At 12 analysts per company, there’s no way I’m reading all those
reports. So, there’s no such thing as too much coverage, but beyond a certain
point, you aren’t picking up incrementally all that much, as an issue.
BARRY HILDRED: Okay, any other questions from any of the locations?
Okay, I think on that note, we’re right at 1:00, so I think we made fantastic time
today. I certainly want to thank the panel, I think they did a fantastic job, and I
want to thank all of you for coming and attending, those in Montreal, Vancouver,
and Calgary as well. And we’ll let you know when our next event is. Take care.
*****
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Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or
result from any use made of this transcript or any error contained therein."
« Bien que Groupe CNW ait fait tous les efforts possibles pour produire cet audioscript, la société ne peut affirmer ou garantir qu’il ne contient aucune erreur. Groupe CNW ne
peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à
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47
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Group will not be responsible for any direct, indirect, incidental, special, consequential, loss of profits or other damages or liabilities which may arise out of or
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peut être tenue responsable de pertes ou profits, responsabilités ou dommages causés par ou découlant directement, indirectement, accidentellement ou corrélativement à
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