Investor relations: A complete waste of time
Contrary to popular belief, management meetings might be a complete waste of time for fund managers.
A research report released in September by Dresdner Kleinwort Wasserstein's global equity strategist, James Montier, argues that there are basic psychological reasons why meeting company management might be a pointless exercise.
First, argues Montier, much of the information gathered from meetings with management is "noise".
Most of the information that managers provide is of low quality, as managers tend to be over-optimistic and over-confident.
Company management meetings can also be unhelpful because investors, like everybody else, suffer from a confirmatory bias. The questions that fund managers ask tend to be leading rather than probing and the answers they receive tend to be designed to please.
DrKW's Montier also highlights our established psychological tendency to obey authority figures. Analysts and fund managers have a tendency to get overawed by CEOs of large successful companies.
"Given the large number of psychological hurdles and the difficulties entailed in overcoming most of them, it would seem improbable that company meetings really add the value that so many investors seem to think they do," says Montier.