The main benefit if CC (i use the one at seekingalpha - i almost never listen to them) is that it gives you a better feel how management looks at the business and what metrics are important to them. Sometimes, I find interesting tidbits of information that can solidify or weaken my investment thesis.
Examples are the HES CC that i commented upon in this thread. HES sure had their difficulties but based on the info they have given and comparing this to information provided by other companies, i knew that they hit pay dirt in a big way in Bakken, even though the financial numbers did not look great.
I also understood a little better that reserve growth was lacking even though they had large investment, because they were developing the infrastructure themselves and that had to come first, and the proved reserves were likely to follow.
A negative example, where I think problems may run fairly deep, is IBM. As i read about Rometty and what she states in CC, it appears that her single minded incentive and goal is to reach the 20$/share earnings goal. I think looking at a single number is dangerous and for that reason, I am not inclined to invest in IBM. I'd rather try my luck with ORCL, which has similar issues (lack of topline growth) but is there management is much more product and customer focused then trying to fabricate a number with financial engineering.
So in my opinion, CC help me understand the business and management viewpoints and that alone makes it worth going through them. |
