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During the window from April to May, many companies usually file their financial results for the previous year.
What follows after is a mandatory meeting, or commonly known as the Annual General Meeting (AGM), between shareholders and the directors which is conducted once a year as the name suggests.
At the meeting, directors share company insights with their shareholders about the past year’s business performance, strategies and the outlook going forward. On top of that, shareholders occasionally get to vote for the election of new or existing directors, approval of directors’ fees, auditors, payment of dividends, etc.
I’ve been attending AGMs of the companies I have invested in for the past five years now. The information I’ve gleaned from them has been highly valuable and extremely useful for my investment decision-making process.
It has led me to higher gains by staying invested in companies whose management teams I felt were clear and competent on how to bring a company forward in the coming years.
It has also helped me pull out of investments whenever I felt the AGM threw up red flags that I needed to take heed of, saving me a lot of money in the process. Because of this, I attend AGMs diligently each and every year.
Here are five important reasons why you should attend AGMs:
Well, the most obvious things first – you get free stuff!
I receive door gifts pretty often from mainly the brick and mortar companies. I attended a healthcare company’s AGM once and they gave me their in-house nutritional products like vitamin C pills, menopause tablets (which I struggled to find a personal use for) along with other goodies. One instant coffee manufacturer gave a few packets of their instant coffee products which were gladly received by everyone there.
But it doesn’t just end there. You get free food as well!
For smaller AGMs of 50 or fewer people, meals usually come buffet style, which is nice. For larger scale AGMs where standing in a buffet line can lead to elbows and handbags being jabbed into your ribs, the free food might come in the form of nicely-packed bento sets or food vouchers. Still free though.
But there is also a free show you can watch…
April/May isn’t time for the Hungry Ghost Festival, but yet you get to see hordes of hungry people rushing to the food area once the meeting is over. In one AGM I attended I saw a group of shareholders literally running out the door and making a beeline for the food before the directors had concluded the meeting!
Another incident held in a five-star hotel, I witnessed a few shareholders taking out their own plastic bags (they obviously came fully equipped) and scooping up fistfuls of chocolate bars that were laid out on a table for everyone to sample. They grabbed everything. Needless to say, the only way I was going to get a taste of those chocolates was to head to the nearest 7-11.
So if you’re there solely for the food (and trust me, there are others just like that), be prepared to push, shove and rush with your fellow shareholders to be first in line for the feast. And don’t be surprised if you see someone brings along a trolley (believe me, I read this in the newspapers last year).
One of the contributors of ValueBuddies.com humorously commented once to me: “Any old uncle or auntie becomes a national sprinter when the food is prepared and ready.”
As (I hope) you can tell, I do not attend AGMs solely for the door gifts and the free food. I go there for the more scrumptious bits — by talking to the company’s insiders (CEO, CFO, chairman, auditors, etc.), I get access to a lot of information not yet written in the annual report, any press release or analyst report.
During the meeting, shareholders pose questions to the board in front of other shareholders. Usually, the answers given are more politically correct. Post-meeting is the best time when shareholders can ask more sensitive questions and, from my personal experience, most management are willing to give you candid answers. As a matter of fact, directors tend to share more sensitive information about their company one-on-one and face-to-face when it wouldn’t be wise for them to share publicly.
Note that smaller companies tend to have a handful of investors and their AGMS conclude relatively fast with fewer questions being asked compared to larger AGMs. Because of this, you get a chance to ask more questions yourself and receive answers which can be extremely insightful and educational.
Not to say large AGMs are not insightful. Believe it or not, one of the world’s largest AGMs, Berkshire Hathaway’s, usually draws crowds in the thousands! And investors from all over the world flock there for one reason – to learn from the great man, Warren Buffett, himself. (I flew to Berkshire’s AGM in 2016. Massive.)
By observing their body language and candour (or lack of), you can tell if the directors are being truthful and ultimately aligned with your, the shareholders’, interests.
Though observation can be subjective from person to person, it is still better meeting and interacting with the management to get a gut feel for yourself rather than not know at all the people who are supposed to be growing your hard-earned money for you.
As what Shelby Davis, one of the most successful investors ever, said, “Face-to-face meetings separate the bluffers from the doers.”
By talking to other investors, you get to learn fresh perspectives why other investors invest in the same company as you. You might discover new distinctions that might improve your research and analysis as an investor.
Sometimes, if you are really hit it off, they might invite you to their private mastermind group for discussion of investment ideas. You wouldn’t know such a group exists until you get invited to one.
So… network, network, network but be selective with who you talk to. Generally, I prefer to talk to savvier investors who seek to truly understand their investments and ask quality questions during the AGM than shareholders who ask common questions like: “Why hasn’t the share price moved up?”
It’s rare but if the management likes you, they might invite you for lunch and you get the chance to ask more insightful questions regarding the business. I, together with Victor, had this privilege with one of the directors sitting on a leading Hong Kong-based multinational conglomerate.
Over the lunch meeting, we learnt so much about one company where he holds a post as chairman. I walked away knowing that the company (and my investment) was in great hands. Today, that company has made some great returns for my stock portfolio.
If you’re already a shareholder of a company, you can simply go in person by bringing your identity card (NRIC) along.
Alternatively, if you’re not a shareholder, a quick tip to get into the AGM is to buy a share or two from the odd lot market before the AGM. Shares from the odd lot cost less and it’s cheaper than having to buy a full lot of a hundred shares. This tip is really useful especially if you’re still undecided on whether to invest in a particular company and you want to attend the AGM to find out more.
In conclusion, do attend your AGMs when they come around! They hold valuable information about the companies that could make a positive or negative impact on your investments.
I mean, if you’re going to invest ten thousand dollars of your hard-earned money in a company, doesn’t it make sense to spend those two hours just to make sure your investment is safe and sound? It makes sense to me and I hope it does to you as well.
If not, well at least you get a free meal and some menopause tablets that might come in handy someday… who knows?
Missed an AGM you wanted to attend? Click here to view a complete list of AGMs we’ve attended »