Tuesday, 15 April 2014

Attend those AGMs in April!

Meet the Management Team 
I look forward to April for its Annual General Meetings aka AGMs.  I am planning to attend at least five AGMS this month alone.  I would have wanted to attend more if not for the fact that some clash with each other.

Before I go into why I attend AGMs, a gentle reminder to send out the proxy forms if you are representing your spouse to attend.  As my husband owns shares in some of the companies, I will get him to sign on the proxy form so that I can represent him. If not, one may still be able to attend but as an observer with no voting rights.

I used to think AGMs are a waste of time. Not anymore!

AGMs are your once-a year chance to see the management team and the big guns who run the companies you have placed your hard-earned money in. So, be there!  They are usually held during office hours so me, being a freelancer, has the advantage over office workers.  Putting a face to the name who appears in the Annual Report helps give a sense of the company culture. I also take the chance to see the level of communication and preparation the team puts in for the AGM. A sense of how often they change management staff and who they are replacing with are also subtle but important pieces of information.

Registration: Seems like the dress code is pants with backpacks? 

Now, onto the AGM proper. There will be a Notice of Annual General Meeting which will spell out the items to be tabled for the agenda.  One of the first items tabled will be on the Annual Report.  This is your chance to ask questions about anything in the report which you find questionable or confusing.  This means you will have to do some homework deciphering the Annual Report even before the AGM, but that's fodder for another blog entry.  In short, be armed with knowledge and if you're a newbie at this, at least arm yourself with a pen! Take notes of relevant information.  Even if you don't have questions, others will.  The replies given by the management are typically more up-to-date during the AGM and it gives a sense of the direction the company they are taking beyond what's communicated in the Annual Report.  These may be useful for you to digest later or for raising the issue again in the following year's AGM.

In my two years attending AGMs, I have been able to sieve through management answers and arrived at the decision to offload shares of certain companies because the companies in question were indeed facing long-term challenges.  I don't think I would have arrived at that decision quite so confidently if I had not attended the AGM.

On the other hand, some management teams have impressed me so much that I decided to increase my holdings when their stocks got beaten down. Thus far, these decisions have not let me down. Of course, attending AGMs alone is not enough. Having an understanding of the industry and financial number crunching are still the bread and butter of any serious investor.

Last but not least, attending AGMs means you exercise your right to vote, albeit as a small investor. You may not swing the decision but it sure feels good to know you have some say in the running of the company.

Nice lunch without buffet fanatics.
Be prepared though that AGMs can be "ugly" affairs too.  If you're lucky, you may just have half an hour wasted by an attendee asking irrelevant or even downright ignorant questions.  There may also be those who have an axe to grind and take the opportunity to raise their personal agendas unrelated to the meeting.  There was one AGM I attended when a lady did exactly that and was booed by the rest of the crowd who asked that she take her questions offline.

Unfortuntely, AGMs are also notorious for attracting buffet fanatics who would stop at nothing to be first in line for the buffet after that.  That's why I love it when the organization decides to distribute food vouchers to exchange for bento sets instead. Or simply give out some grocery voucher or equivalent.

All said and done, if you can ignore the above quirks, you'd find that AGMs may indeed be worth your time.

(This article first appeared in CPF's IM$savvy Blogger's Corner.)