There are a handful of red flags that should make you Run-Do-Not-Walk in the the opposite direction from any publicly traded company.
An obvious one is when management laments short sellers. You will note that while plenty of disaster stock managements have done this, you really don’t here it from the likes of well managed companies — because smart people understand the role shorts play in the market. And, they run the company in a way that keeps them out of the short’s crosshairs.
The other flashing red light that should have you lunging for the phone to call your broker is when management does not allow analysts or reporters to their public shareholder meeting.
That’s what IDT did this week, and it gives the company the appearance of having something to hide.
The IDT Corporation, a telecommunications and entertainment company that is under pressure for its languishing share price, barred a New York Times reporter from its shareholder meeting yesterday.
In the last year, the company has drawn attention on several fronts, including its foray into making movies and some disputes surrounding its long-distance telephone business.
Nell Minow, editor of The Corporate Library, a governance watchdog, said barring journalists from annual meetings was uncommon but not unprecedented. There is nothing requiring public companies to open their shareholder meetings to the public.
"Sunshine is the best disinfectant, and companies that have nothing to hide welcome the press," Ms. Minow said.
Not only did they not allow the press into a public meeting, the idiots got caught lying about it:
"A woman identifying herself as working for media relations at IDT, which is based in Newark, said it was her understanding that IDT has never let reporters attend its annual meetings.
But newspaper archives indicate that reporters from New Jersey newspapers attended IDT’s annual meetings in 1997 and 2000."
Hey, if you don’t want the public (or their representatives) coming to your meetings, THEN DONT GO PUBLIC. The reasoning involved is simple enough that even a PR flack should be able to figure that out.
As previously mentioned, there are 9,000 public companies. Limit your choice to one of the remaining 8,999 firms, trying to choose one that has a credible, intelligent management team.
Here’s some good investment advise you won’t find in any book: steer clear of assclowns.
That includes firms that may have something to hide — like IDT . . .
Once again, I have to ask: Where is the NYSE in all this? Is it there policy that its OK for companies to disallow reporters or analysts from public meetings of their listed companies?
Shout out to John Thain: Any chance of promulgating a shareholder friendly listing requirement that prevents this sorta nonsense from happening? While it obviously reflects poorly on the listed company, it also makes the NYSE look pretty pathetic by association . . .
Phone Company Bars Reporter From Its Shareholder Meeting
NYT, December 16, 2005