Analyst messages and access to them
In addition to reviewing the reports, the activities of companies can be monitored by listening to reports by analysts. Some of these reports, which contain information about quarterly or annual results, are sponsored by the companies themselves, while others are sponsored by independent analysts.
Analysts' reports sponsored by companies
Analysts' messages, sponsored by companies, are conferencing sessions designed primarily for institutional investors and Wall Street analysts. Such conferences are held quarterly or on a semi-annual or annual basis and can serve as an excellent source of information about the company's current performance or its future prospects.
During such sessions, top management of the company, which typically includes the company's chief executive officer, its president and vice president of finance, sets out the content of its financial reports, and then answers questions from participants in a conference call.These conferencing sessions are planned in such a way that they coincide in time with announcements of important changes in the management of the company and its activities. After setting out the formal report, the top management of the company answers the questions of analysts. It is at this stage of the conference that you can get the most valuable information about the company you are interested in and how the management of this company perceives its current financial situation and its immediate prospects. In the next section of this chapter, we will discuss how to interpret this information and how to get the most out of the information received during a conference call.
Only professional analysts and institutional investors can usually participate in such conference sessions, however, according to a survey conducted by the National Institute of Investor Relations, more than 80% of companies that sponsor analytical reports now provide access to the media and individual investors. We are obliged by this change mainly to the new Rules for ensuring openness in the financial sphere, developed by the EC.According to these rules, companies are obliged to make publicly available all important announcements that may influence the value of the shares of these companies within 24 hours from the moment the relevant information is provided to any third party. This rule helps provide access to information for individual investors.
Analysts can no longer expect to receive a two-three-day stock when it comes to important announcements, which once helped them to inform large investors about the news related to certain companies. Often, the presence of such a margin of time allowed analysts to recommend to their most important clients the purchase or sale of certain stocks, but this practice caused damage to small investors and traders who were not able to receive such news. Now we have to hear complaints that this new rule, in fact, disrupts the flow of information, because companies no longer dare to confidential conversations with analysts, which prevents analysts from compiling quality reports. Since this new rule came into force in 2000,it is still not possible to make a final judgment regarding the true effectiveness of the Rules for ensuring openness in terms of providing equal access to information to all interested parties and how this rule will affect the performance of investors specializing in the purchase of shares and traders.