Shares for the future: hold fire until you see the whites of their eyes
1st June 2022 14:39
by Richard Beddard from interactive investor
Have a share you'd like to ask questions about? Getting face to face with companies is not always easy, but Richard Beddard shares his advice on the best way to get answers.
Twice in my investing life I have turned up at an Annual General Meeting (AGM) on the wrong day.
Actually the first time, many years ago, I didn’t quite make it.
Talking to companies that don’t want to talk
AGMs usually start in the morning and sometimes that means biking to the station before companies have started releasing announcements via the Regulatory News Service (RNS), the official news outlet of the London Stock Exchange.
Most companies put out a statement at 7am, which may include an update on how the business is doing. An important part of AGM preparation is to read it.
That time I didn’t quite make it to the AGM on the wrong day, I jumped on the train at about 7am and as it pulled out of the station, I looked at my news feed anticipating the AGM statement.
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There was no statement. Just to be sure, I checked my calendar and realised my error. Unfortunately I was on a direct train, and my punishment was to sit on it all the way to London, cross to the neighbouring platform and return having spent the morning staring through a carriage window at the home counties speeding by.
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This incident scarred me, but not as much as the non-existent AGM I attended earlier this year.
This time I had put the wrong date in my calendar so, when there was no statement and I checked my calendar, I thought there must have been a glitch in the RNS service, or the company had no need to issue a statement as it had recently updated the market.
The meeting was at the company’s broker, and they were as surprised to see me as I was to learn the meeting was actually the following week.
Fortunately, I had already voted electronically, and rather than making me return on the right day, the broker put me in touch with the company and one of the executives called me to answer the questions I would have asked.
A happy ending you might think (so did I), until the very end of, effectively, an interview. I had, learned a lot, and it has found its way into my articles.
But you may have noticed that I have not named the company. That is not out of choice. I agreed not to, rather lamely.
The executive did not want to encourage “all sorts” to make demands on their time.
In my defence I had got what I needed and, grateful for their time, I was keen not to use more of it. But I regret not asking what they meant by “all sorts”.
I am somewhat unusual in that I attend AGMs as a shareholder, but I also write about the companies I own. Sometimes I think this makes it more likely that companies will want to talk to me, but other times I think it gives them two reasons not to engage.
This would have been an opportunity to learn which persona was the more off-putting.
Companies should explain themselves to shareholders directly, and through the media, but I do not have the temerity to think chief executives should be at my beck and call.
Furthermore, I am a bit leery of overly promotional executives and I have a grudging respect for those who just want to get on with the job (even though part of it is to be the outward face of the company).
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So I have been wondering, had I approached this company directly with my questions, would it have answered them? Or did the door open because I had demonstrated my credentials as a shareholder by turning up at the broker and waving them, albeit on the wrong day?
The episode reaffirms my belief that the best way to get answers about companies is at the AGM, where it is our right to ask and we can look the executives in the eye.
But it also dismays me that a company I admire might be reluctant to engage all sorts.
Small companies that attract little attention are, on the whole, willing to talk to people who show an interest. Large companies employ gatekeepers, investor relations people or agencies who deal with routine enquiries and decide who gets to talk to the executives.
When I correspond with Next (LSE:NXT), the FTSE 100 retailer, I deal with the company secretariat, which sounds like a bureaucracy out of a film like 1984, or Brazil. Getting answers can be a protracted process, but they come.
I think some companies fall in between. They are big enough to attract quite a lot of interest but baulk at the cost of professional gatekeepers.
This is pertinent to me now, because there is a company in the list of 40 companies below, one of the companies I follow closely. I have done my research. You may have read it. The share is a candidate for investment, but there are things I would like to clarify.
I have emailed the investor relations contact listed on its website and not had a reply. The next stage is to pick up the phone and ask to speak to the company secretary or chance my arm with its Public Relations (PR) agency. But perhaps I am going to have to buy my way into the AGM.
I have not tried, but since interactive investor gives me a free trade every month and I do not always use it, perhaps I could buy a single share.
Wielding that awesome voting power would be fun.
Decision Engine
Since the last update a month ago, I have re-scored four of the 40 shares in my Decision Engine: 4imprint Group (LSE:FOUR), Advanced Medical Solutions (LSE:AMS), Judges Scientific (LSE:JDG), and Next (LSE:NXT).
I give shares a score of between 0 and 2 for each of the following factors: Profitability, Risks, Strategy, and Fairness. The fifth factor, Price, is scored algorithmically between -2 and +1.
The shares are then ranked by their scores so the highest scoring are at the top of the table.
All 40 businesses in the table are probably good long-term investments, that is why I follow them.
Those with the highest scores are therefore, in my opinion, the best of a good bunch.
0 | Company | Description | Score |
1 | Supplies kitchens to small builders | 9 | |
2 | Manufactures pushbuttons and other components for lifts and ATMs | 8 | |
3 | Manufactures military technology, does research and consultancy | 8 | |
4 | Casts and machines steel. Processes minerals for casting jewellery, tyres | 8 | |
5 | Manufactures personal care and beauty brands | 8 | |
6 | Retails clothes and homewares | 7 | |
7 | Imports and distributes timber and timber products | 7 | |
8 | Translates documents and localises software and content for businesses | 7 | |
9 | Designs recording equipment, loudspeakers, and instruments for musicians | 7 | |
10 | Designs and manufactures tableware, candles and reed diffusers | 7 | |
11 | Manufactures/retails Warhammer models, licenses stories/characters | 7 | |
12 | Sells promotional materials like branded mugs and tee shirts direct | 7 | |
13 | Sources, processes and develops flavours esp. for soft drinks | 7 | |
14 | Manufactures filters and filtration systems for fluids and molten metals | 7 | |
15 | Manufactures PEEK, a tough, light and easy to manipulate polymer | 7 | |
16 | Manufactures tableware for restaurants and eateries | 7 | |
17 | Manuf's rugged computers, battery packs, radios. Distributes electronics | 7 | |
18 | Manufactures power adapters for industrial and healthcare equipment | 7 | |
19 | Manufactures natural animal feed additives | 7 | |
20 | Makes light fittings for commercial and public buildings, roads, and tunnels | 7 | |
21 | Develops and integrates Customer Data Platforms | 7 | |
22 | Acquires and operates small scientific instrument manufacturers | 7 | |
23 | Whiz bang manufacturer of automated machine tools and robots | 6 | |
24 | Publishes books and online resources for academics and professionals | 6 | |
25 | Manufactures specialist paper, packaging and high-tech materials | 6 | |
26 | Distributes essential everyday items consumed by organisations | 6 | |
27 | Manufactures and distributes fasteners and other low cost components | 6 | |
28 | Sells hardware and software to businesses and the public sector | 6 | |
29 | Manufactures surgical adhesives, sutures, fixation devices and dressings | 6 | |
30 | Manufactures disinfectants for simple medical instruments and surfaces | 6 | |
31 | Operates tenpin bowling and indoor crazy golf centres | 6 | |
32 | Manufacturer of scientific equipment for industry and academia | 6 | |
33 | Supplies vehicle tracking systems to small fleets and insurers | 6 | |
34 | Manufactures connectivity components and power cord | 6 | |
35 | Supplies software and services to the transport industry | 5 | |
36 | Chocolate maker and retailer | 5 | |
37 | Manufactures vinyl flooring for commercial and public spaces | 5 | |
38 | Supplies schools with equipment and IT, and exam boards with e-marking | 5 | |
39 | Casts and machines parts for vans and trucks, primarily | 5 | |
40 | Flies holidaymakers to Europe, sells package holidays | 4 |
Scores and stats: Richard Beddard. Data: SharePad and annual reports
Shares marked with an asterisk* score less than 5 out of 6 for Profitability, Risks and Strategy. They are more speculative
Click on a share's name to see a breakdown of the score (scores may have changed due to movements in share price).
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns shares in most of the Decision Engine companies, with a particular emphasis on high scoring ones.
For more information about Richard’s scoring and ranking system (the Decision Engine) and the Share Sleuth portfolio powered by this research, please read the FAQ.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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