As an investors, conference calls can be one of the best tools at your disposal. They’re that relatively rare opportunity where you get to hear straight from the mouths of management. And for me personally, conference calls (and their transcripts) have been essential part of my investment due diligence.
Let me tell you why.
Forget about speculative news headlines and unfounded rumours. Conference calls typically allow you to get the truth, straight from the source. It’s an incredibly easy way to get yourself up to speed on the key initiatives your portfolio companies are undertaking. And it allows you to judge for yourself whether or not analyst estimates are founded in fact or fiction.
In other words…
Conference calls offer you important insight on how the investment narrative. And, at least in my humble experience, there are a couple of reasons this story arc is worth paying attention to. The reason is, when you understand the consensus narrative about how a company is doing, you can start to determine whether it is undervalued, over-valued, or just about right.
For example, in the Investment Checklist and The Art of Value Investing, the authors explain you ned to know what the street thinks (consensus narrative), so you can determine if your “variant perspective” is valid, or if it’s been discounted by the stock market already. Only then can you start to have some confidence in your value investing thesis.
So basically… if you want to do some second-level thinking about your stocks, then conference calls are a great way to help you ask the right questions. They can really help you see what the analyst community is expecting. And it’s how you can start to understand what’s “priced-in” to your stock at the current market cap that you can really start having investment insights.
It’s for those reasons, that I think conference calls are some of the best investing resources you can find. And best of all, they’re free!
So head on over to Seeking Alpha or ConferenceCallTranscripts.org to get up to speed on the latest conference calls for your favourite companies.
Happy earnings season!