1/ We are in results season and there is a mad rush to attend concalls and be on top of every number published. But what value does this info provide? My views in this thread
2/ The vast majority of questions in concalls are clarifications, short term (ST) related (next Q, year end), tactical numbers (eg. what margin, growth rate, capex, etc). Some are even focused on abscure matters like depreciation!
3/ The real reason for these qns is that the analyst is focused on his job — ie to update his excel model which will spit out a (mostly 12M) price target. The entire construct is ST focused.
4/ This is great if you are a momentum driven, <1y hold kind of investor (it’s perfectly ok to be one — you need all styles to make a market). But it’s of little value if you are a long term investor or if your style is value driven
5/ Most justifications of the quarterly concall are around tracking. But are you really “tracking” if you are focused on clarifications, tactics and ST info for 90% of an hour long call? How does this info guide you to make a multi year call?
6/ The other justification is around hearing the mgmt speak again I’m not sure it adds value for the LT investor. Unfortunately, the more chest thumping that goes on, the higher the investors “conviction”; good speakers may not be good decision makers
7/ So, what should one do? One of the key learning for me over the last few years has been on time, focus and efficiency or to put things in a lingo most will understand — Return on Effort Employed (#RoEE). If you think like me carry on reading the rest of this thread
8/ I don’t attend concalls (rare exceptions) — It hasn’t made a difference to my investing or my returns. I mostly read the transcript or the news the next day if it is really important. 9/10 times it isn’t. And it’s because of the way the call is structured.
9/ You are unlikely to get answers to difficult questions or to data which will help you but mgmt “believes” will compromise them. “We will get back to you”, “Take it offline” is evasion. You can persist but unless you have access #RoEE will be poor.
10/ A discussion on one quarters outcome according to me is largely of no consequence. If you have run or closely observed a business you will realise that business people don’t think in quarters.
11/ The are obsessed rather about competition, customers, vendors, capital flow and plan Bs. Rarely does that get discussed. Granted some of them are also obsessed about their stock price :) but that’s another story
12/ The concall is an event tailored to cater to the research guys. The mgmt reads off a script (sometimes after much practice). The deck is shiny with upward sloping graphs. There is no discussion on risks. It’s a marketing pitch designed to make analysts bid ...
13/ ... And likewise the report next day has one para or none at all in a 5-10 page report dedicated to business risks (There are 1-2 pages on the analysts risks!) Investing in my view however is about pricing risk right. How does one do that if only the upside case is discussed?
14/ I’m not advocating that one shouldn’t attend concalls. I’m just giving my thoughts on why in its current format it doesn’t work for me, my style and time preferences. Maybe if I retire and am a full time investor I will do it to pass the time (fin)
PS: I should probably add this amazing Venn diagram from @behaviorgap to this thread in the quest for #RoEE 
