Friday, April 14, 2006

The value of AGMs 8 comments

(P.S: Sorry for any disturbances the advertisements above may have caused you)
It is that time of the year again where the management of listed companies come face-to-face with minority investors. Today's Business Times had an article by R. Sivanithy today ("Are AGMs a necessary charade?") which put a question mark on the value of AGMs.

How many of you actually go to the AGMs of companies that you invest in? And if you do, is it for the food (where the food spread, I heard, is getting less lavish every year... is that indicative of the trend in which minority investors are being viewed?) or do you genuinely go there to try and get good insights from management first-hand.... what they call scuttlebutt?

I have to admit that I have never been to a single AGM in my life. For various reasons, the main one being that I have to earn a living elsewhere, but also because the inconvenience of actually having to take time off to attend these AGMs outweighs the value of getting to watch company management field questions from minority investors. From the "scuttlebutt" (or feedback) on the AGMs that some friends have attended, they are merely half- or one-hour events where management goes over each resolution and ticks them off without much protest from the audience; questions are usually curtly dealt with. The audience, by the way, are more like spectators (an audience listens and asks questions to learn things, spectators hope to catch action such as quarrels or management being caught in a tight spot).

Hence it is that AGMs are typically mundane affairs, sometimes interesting to watch or even dramatic (during Natsteel AGMs with Oei Hong Leong in attendance, or heated exchanges between JY Pillay and a veteran investor some years back at an SGX or SIA AGM, I think), but seldom justifying the minority investor's decision to attend to try and understand more of the company from the horses' mouths. Wish there was a Warren Buffett in Singapore whose words of wisdom alone were enough reason to buy a share in the company just to get a ticket to the AGM.

Seriously, there could be so many ways to enhance the value of an AGM, given the advances in technology (and the general tech-savviness of investors) nowadays. Firstly, prior to the AGM the company could invite questions from investors in online forums, and then proceed to answer them during the AGM. There are quite a number of companies already fielding questions on, but none of them have actually integrated them with their AGM. It would be so valuable to small investors to hear management address their doubts on the company face-to-face ..... that's the point to AGMs isn't it? Secondly, these companies might as well cut the cost of sending to investors thick circulars on "Proposed Amendments to Articles of Association" blah blah blah that nobody really reads, and instead put it online (after all, investors should be rich enough to own an Internet line, and can get their children to help them load the documents); they can use this money to send investors a copy of the AGM proceedings instead (including questions asked and answered); I do think that will be much more valuable to shareholders. Thirdly, a non technology-related suggestion: can they please hold the AGMs in the evening where more minority shareholders working during the daytime can make it?

Somehow, I don't think the last suggestion is going to work, given the people dynamics involved as suggested by R. Sivanithy. The group that the company management want to cater to are the substantial shareholders such as the fund managers, and these guys are not going to work overtime by attending AGMs in the evening (and perhaps, neither is the management ready to do so). On the contrary, if the company management are eager to minimise contact with minority shareholders as well as embarrassing/difficult questions from them, then I think they have optimised things with the way that things are now with AGMs.




Blogger Quest said...

wow loads of sarcasm this time, daniel.

rather unexpected.

4/15/2006 9:29 AM  
Blogger DanielXX said...

Yes quest, I hate wayang shows :-) If AGMs fulfil the letter of the law but not its spirit, then what's the point?

4/15/2006 7:07 PM  
Anonymous Anonymous said...

Hello Daniel,

There is one company which hold their AGM in the evening ie. Osim. This year, Unifood AGM is held on a Sat, if I didn't remember wrongly.

As you mention, AGM is for fund manager. You will be surprise that there are very few fund management personnel attending them.

However, I really your suggestion to post their questions to the management via the company website is real good idea. Then to address them during the AGM is enriching and a better understanding of the company business. One of the company that did this or near to it is Micro Mechanics.


4/19/2006 7:30 AM  
Blogger Norman Oh said...

I still believe that AGMs are a useful source of information for investors to field any questions or doubts to the management. It's just a matter of raising your hand. Retiree investors usually post the most interesting questions. For example, at the OSIM AGM, some retiree investor asked why there is this 10K annual entertainment expenses in page X section Y. Ron says its for his own personal use and has been there since its listing. I was stunned to missed out such details. He mentioned he had no time for golf, then why give him that money then i was thinking. Now that, OSIM is the title sponsor for the Singapore MASTERS, probably he will need the membership more now. Hahaha.

From AGMs, i like to observe the subtle expressions on the CEO's face and the tone of his voice. If the passion and the sincerity gets to you, you know this is an honest man, a true blue business man.

Disclaimer: I never stayed back for the buffet, cause eating alone sucks.

4/20/2006 5:54 PM  
Anonymous Anonymous said...

Hello Niversphere,

I totally agree AGM are important to serious and small investors. I felt I benefitted a lot attending them.

If I will have the time, I will attend them all.


4/21/2006 6:17 AM  
Blogger DanielXX said...

AGM watch season! However, election is more exciting. I have never been good at observing and reading people's mannerisms and behaviour so I guess the value-add is less for me. The classic case, of course, is Chen Jiulin, who charmed all the investors and then turned out to be the biggest conster of all. It is difficult to judge the character of the person from one annual meeting, and methinks if he has risen to the position of CEO, he should have been able to manage his public persona very well and mask any underlying problems.

Well, of course this doesn't mean one should not try and get something from the AGM, of course. If I really had some burning issues, I would go to the AGM and grill them like the journalists grilled LKY at the TV show :-)

4/22/2006 5:24 AM  
Blogger Norman Oh said...

Hi Setan,

Good that we benefited from AGMs.

Hi DanielXX,

I think the press over emphasised Chen's charisma as a leader. Do not want to come across as a ma hou pao, so i leave my comments here.


4/22/2006 8:28 AM  

Excellent post many great posts.

1/14/2014 10:45 AM  

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