Although this was a staple of my working life, I haven’t done this much over the past few years, until recently. Three reasons:

–disclosure through company websites and SEC filings is usually more than enough for me to make an investment decision,

–SEC Regulation FD (Fair Disclosure) from 2000 prohibits selective disclosure of material non-public information about company operations. To avoid violating this rule, company spokespeople have developed artful ways of presenting publicly available information to shareholders that make it seem as if they are revealing deep, dark secrets. This presupposes, of course, that listeners haven’t read company disclosures carefully, but in my experience this tactic is surprisingly successful, and

–I’ve been more focused for a very long time on company-specific information rather than thematic information about industry or sector trends, until the current calmer, sideways market has got me looking more at the Consumer Discretionary sector and how that is changing, post-pandemic

If you’re on the fence about whether or not to buy/sell, contacting a company can provide valuable information, despite Regulation FD. In my experience, however, you get a clear signal only if you’re treated badly, though. As a general rule, the attitudes and behavior of top management very quickly permeate a company. So if the investor relations department has no time for an actual or potential owner, chances are that’s because the CEO is signaling that creating value for shareholders a relatively low priority.

I can think of three important instances of this in my career:

—Intel. This was about eleven years ago. The stock was trading at a discount to book value and had a very high dividend yield (which kept the stock from going even lower). The big issue with the company was, and still is, that its chips were too big and threw off too much heat to be used in mobile devices. And the company appeared to be falling farther behind its ARM-based competitors in the race to make new offerings cooler and smaller. On the other hand, the stock was very cheap. So a bought a little and called the investor relations department. I introduced my self as a professional investor and a shareholder. The IR person refused to speak with me, other than to say I could get any information I needed by paying a broker for a research report.

Put a different way, INTC was happy to provide, for free, copious amounts of company data to brokerage firms that didn’t own the stock and might even be aggressively shorting it. Even though I was a part-owner of the firm, the IR department was saying I could only get relevant information about my company by buying it from a broker the company had gifted it to.

This is crazy. But it’s a common point of view among mature companies whose arteries have hardened and whose managements have become bureaucrats, more concerned with preening at investor conferences than making money for shareholders.

From that call I learned something very valuable–that INTC had its priorities all messed up. So I knew that this was not going to be a long-term holding. The stock came close to doubling over the next few months, because it had been super-cheap when I bought it. I just checked the current stock price. The stock is lower today than when I exited.

–Sony. In hindsight, this was a stupid stock to buy. That was brought home to me when I went to a tech conference in California. As I took a seat in the room where Sony was about to present, a Sony IR person came up to me and asked me to leave. I told him I was a shareholder. He replied that the briefing on the latest developments with the company was only for brokerage house analysts, not for owners. I said I wasn’t leaving and he left me alone. When I got home, I sold. The stock has doubled since then, but the S&P has tripled. And Sony, unfortunately for shareholders, has transformed itself from the plucky maverick that started operations in a quonset hut after WWII into a clone of the brain-dead traditional zaibatsu conglomerates.

–Disney. This was right after the acquisition of Marvel was announced, about a year after Michael Eisner’s shareholder-unfriendly reign as CEO of DIS had ended. It was right at yearend and I had a question about whether the deal would settle in 2009 or 2010. I identified myself as a professional investor and a shareholder of Marvel (hence effectively also of DIS) and said I had a time-sensitive question. I was told I would have to wait until after all brokerage houses had been briefed on the deal before anyone could speak with me. I read the answer to my question in the newspaper the next day, about 12 hours before DIS called back.

I knew there were huge synergies from the Marvel deal, with more theme park attractions, getting powerhouse DIS distribution for Marvel merchandise and getting competent movie makers to tell the stories of Marvel characters. I attributed the insensitivity of the DIS IR department more to the disastrous Eisner management regime of the early 2000s (think: Eurodisney) rather than Iger, so I didn’t sell.

There are few flat-out rules in equity investing. The most sure-fire is that when someone starts talking about the Dow Jones indices, you know that person is clueless. Evidence that a company management is more interested in impressing brokers, who are at best frenemies, than in communicating with shareholders is up there as a strong second, usually a clear signal to head for the door.