Tuesday, March 1, 2011

Handy Guide to Investor Presentations

This is a public service announcement to all IR departments (with a sense of humor). Follow the template to avoid awkward moments during investor conferences. We list the essential elements of effective PowerPoint communications with your investors. Here’s what you need to say and show:

(1) You are “on trend”: whatever it is that you do, be it fried chicken, mining equipment or vaccines, make sure you specify the undeniable, secular trends you are on.

(2) You are a “growth” company: if there is any doubt, be explicit, “XYZ is a growth company.” Any information that you present should be sliced and diced to show growth. Make sure you accentuate the CAGR with a splash. If you do not have EPS, do “adjusted” EBITDA, if that doesn’t show, do only revenues. If you can’t even do that, do page views, employee count, ocean temperatures or obesity rates.

(3) Show Asians: Asian farmers, Asian children, Asians in business suits talking on a cell phone, Asians with shopping bags, Asians families eating.

(4) If your business destroys something, show it whole. If you cut trees and chew them into paper, show vibrant green saplings. If you pollute the air, show blue skies and flowers. If you are polluting the water, show alpine lakes or mountain streams. If you are outsourcing or claiming incredible “efficiencies,” show smiling workers.

(5) Don’t forget a map of the world, full-slide size. If you have a web site, you are global.

(6) Extrapolate into the future. If the stock market has been so-so, use straight-line. If the stock market has been strong, use exponential growth.

(7) Compare against the competition but make sure it is in the most favorable light possible. Your company is both the most efficient AND the most undervalued. If you are a conglomerate, present a sum-of-the-parts and lament that the market is discounting you instead of valuing you fairly.

(8) Mention something about shareholder value. This can be a discussion of buybacks and dividends. Do not, under any circumstances, discuss option grants that neutralize any buybacks announced. If you are actively destroying value through acquisitions, go full 1984, and say you are creating it through acquisitions.

(9) If your company really hit the floor in ‘08/’09, mention something about “lessons learned” and “being stronger and smarter as a result.” Do not credit stimulus spending, bailouts or ZIRP and its short-term effects.

(10) If you’re a commodity company, always place yourself on the upswing of the curve, with plenty more runway to go. Also on the graph showing future cyclical low earnings, make sure the low is higher than the current normal because this time, it is different (really).

(11) In the unlikely even that the company is in legal hot water, be explicit that you are cooperating fully, committed to doing the right thing, and that you have the strongest ethics policy in the industry. If there have been actual indictments, these are a few rogue actors acting on their own, without management’s knowledge, let alone tacit or explicit approval.

This post was inspired by The Reformed Broker's Recipe for a Trading Blog.

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