By Christine Small of http://csongbird.com/
I am not sure about you, but nowadays, the only time my phone calls ever get picked up by a live human on the first try is when i’m calling my mom, bless her heart. So when i’m not calling my mom, i’m mouthing the message i’m going to leave on the voicemail as i dial. as investors, we’d love it if say, Google’s CFO picked up the phone when we call to answer our questions. Never say never, but i bet that’s never happened. however when you’re a small cap investor, “crazy” things do occur and i’m constantly surprised by how often i get a live voice whenever i call company management. And that’s the joy in researching small cap companies – you’re never too small to be a shareholder.
Regardless of whether you own ten, a hundred or a million shares, i’ve found that small cap company management will take your calls (and if they stop, that may clue you in to something too). as the CFO of a small cap tech company once told me, he was amazed by how few shareholders bothered to call. Now as a bottom-up research investor, i love talking with management because behind every stock price is a hot-blooded company run by real people. They are dealing with real issues all the time not just four times a year when most investors tune in to listen to the quarterly conference calls.
Stocks move based on expectations and when a stock goes up or down (crazy flash crashes aside), it’s because something unexpected happened. there are times when truly the unexpected occurs and there’s no way you would have know (or if you did, you’d go to jail for acting on inside information). Other times, the “unexpected” was there to be expected had you just followed up with management about something already disclosed in a company press release, something their customer/competitor/supplier had disclosed or a development in their industry.
Investing is both an art and a science and part of the art is discerning knowledge from conversations. remember, you’ve got to do some basic homework before you call, the company CFO isn’t your new bff so be prepared (would you want the CFO spending time running through the rudiments with you or busy managing expenses?). So make sure you’re somewhat prepared before you dial, but don’t be intimidated – as a shareholder, you own a piece of the company. on the website of every publicly traded company you’ll find an Investor Relations section with an email or telephone number. Set up that call – though it may not be as enjoyable as speaking with your mom, more times than not, management will pick up and i guarantee you’ll get insight into your investment that staring at the financials won’t provide.