One of the key points that I make whenever I talk with investors is the importance of information. That information can take many forms. There are the obvious ones — press releases, earnings reports and related company conference calls, financial filings with the Securities Exchange Commission, third-party research reports and all sorts of articles in newspapers, magazines or online. That’s the easily available kind of information. As you might imagine, if it’s easy to get, then most people probably have it.
Viewed from the institutional perspective, i.e., mutual fund and hedge fund managers, information available to everyone provides little edge to anyone. I’m not suggesting they utilize or condone the use of inside information — far from it. Instead, I’m talking about going one or two steps further than what everyone else is doing. That extra effort can take the form of buying industry reports or subscribing to other services, such as my investment newsletter PowerTrend Profits, which uses institutional tools and methods, along with my PowerTrend lens, to invest.
There is another resource that most investors have available to them, but it’s surprising to me how few actually take the time to use it. Most, if not all, publicly traded companies have an investor relations department, which is staffed with knowledgeable folks who can help you to understand the company, its products, the industry and how it competes in that industry.
For the more than 20 years that I have been in and around stocks, these folks have been a great resource. But as you would expect, some have been better than others. An investor relations person is not going to share non-public information or divulge anything sensitive, but a good one can help you understand the business and the company’s strategy. That’s more than helpful, and I don’t understand why more investors do not utilize these folks.
I take that back. I know why most folks don’t do it.
First off, few know these people exist and are paid to answer your questions about the company. Second, people may feel they do not have the time, as in the amount of time it takes to get ready to have a productive conversation with an investor relations person or any of the company’s management team members. It takes far more time to prepare and fine tune your questions compared to the actual conversation time with them. As for me, I’ve been having these types of conversations for more than two decades, thanks to my earlier career in Wall Street equity research firms.
Chris Versace is the editor of PowerTrend Brief — a FREE, weekly electronic newsletter. He also writes PowerTrend Profits, a paid monthly newsletter that helps individual investors profit through buying shares of companies poised to win big in the 8 PowerTrends, as well as writes the PowerTrader trading service that seeks to deliver short-term gains using stocks, ETFs and options. Chris has been ranked an All Star Analyst by Zacks Investment Research.