I have attended my fair share of annual general meetings (AGM) over the years.
It started as an itch I needed to scratch as I was started on my investment journey more than a decade ago.
The premise was simple.
Where could I find out more about the business other than what was disclosed in the annual report (AR)?
The answer: AGMs.
It seemed like a no-brainer to engage management and find out more about the companies I invested in.
And so, I trotted along, pen and notebook in hand, to take notes while quizzing management on various aspects of the business.
It turned out to be a more interesting exercise than I had anticipated.
Picking up cues
I made it a point to try to attend as many AGMs as I could.
By doing so, I would learn more about a variety of businesses through reading the AR and interacting with the management.
Over time, I realise that the ability to pick up subtle cues was important in helping me form an opinion of what management was like.
And you, as a Smart Investor, can do the same as well.
Was management candid and open, or evasive and reticent?
Were they willing to share information with minority shareholders on how they intend to grow the business?
It’s an interesting study on human character and behaviour.
On one hand, you needed a certain level of engagement to comprehend and learn about what the CEO or CFO was trying to communicate.
But on the other hand, you should also be wary of “superstar” C-suite individuals who actively promote their company, over-promising while under-delivering.
It’s a fine balance, to say the least.
My deepest impression of management came from an encounter I had with an oil and gas company.
For confidentiality’s sake, this company shall remain unnamed.
I attended its AGM back in 2006 and recall peppering management with questions about growing the business.
After the AGM proper, there was an unofficial “meet and greet” session where shareholders could rub shoulders with the management and chat more casually.
I recall talking to one of the directors — a gentleman who was probably in his 60s.
And what he said struck me as bordering on narcissistic.
Amid chuckles, he admitted that he spent time googling himself on the internet to see what search results he could find.
He was also trying to see how popular he was and if his name would be mentioned on any websites or investment blogs/forums.
It was a weird conversation because none of us knew how to react to this piece of self-volunteered information.
But there and then, I think I had made up my mind about that particular director.
The human aspect
To be fair, I am not implying that directors who admit to frivolous hobbies are not serious about the business.
But at a venue where directors and management engage with shareholders to provide confidence about the business, it’s unsettling, to say the least.
For what it’s worth, this particular oil and gas company eventually got into financial trouble and is now under judicial management.
The point here is not to single out this person and point out his apparent arrogance.
It’s to provide an example of how we should not neglect the human aspect of a business.
Businesses are, after all, run by human beings.
And if you don’t feel comfortable with or confident about the management, then there is no reason to invest in that business.
When you park our hard-earned money in a company, you need the assurance that management is competent.
This year’s AGMs will mostly be conducted remotely, so the chance of face-to-face interaction is almost non-existent.
But once economies open up again and things go back to some semblance of normalcy, it’s time to trot up to management once again.
So, remember, it’s important to learn more about the business and the people running it.
And one of the best places to start is by speaking with them.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.