Due Diligence on Pacel, Part 3 of 3: Pacel Investor Relations
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I hope you're sitting down for this third part of the DD because what you're about to read might be nothing like you quite expected.
When PLRP hit the scene a few months ago and it went from having almost no volume to having tremendous volume, and there were one or two newsletter recommendations and the stock was touted as going to $1 very soon, I think it was reasonable for the average internet investor to assume that Pacel Corporation was one of these companies that knew how to play the internet investor very well. Surely the source of the hype and excitement ultimately originated form the company, right? I mean, they must have played some sort of behind-the-scenes role in the explosive interest the stock was enjoying. Let's face it, Mr. Calkins was answering and returning just about every phone call back then. That Pacel, they really know how to take care of an investor, they really know how to feed the dog a bone. By golly they were going to hold our hands and personally walk us to the gate of the promised land. Right? Right? ...
And now the reality: Dave Calkins doesn't care what we type on this thread. It's not that he doesn't like us, or that he doesn't think about us, and it's certainly not that he hates us. It's just that he doesn't care what we type here. If someone made 100 posts in a row that said, “PACEL ROCKS!! GO PACEL!!” Dave Calkins would not care. If someone made 100 posts in a row that said, “PACEL SUCKS!! GET LOST PACEL!!” Dave Calkins would not care. I'm not saying that he really cares but he pretends to not care. What I am saying is that he does not care, period.
Now before you go jumping off a bridge because all your Pacel shares are worthless due to the bad-man CEO who doesn't care what we type on this thread, please read on. He cares about you as an investor, just not nearly to the degree that we think he should care about us. To be honest with you, he is not working hard everyday to learn about the way we think. For Dave Calkins, there is only one kind of investor relations and that is to meet his milestones for sales revenues (specifically, those are: $2.8 M in 1998, $5 in 1999, $11M in 2000, $22M in 2001).
My opinion is that if he meets these goals, he will rate his investor relation skills as “Very Good” and that if he doesn't he will rate his investor relations skills as “Poor”. I don't agree with this, of course, because I think it's appropriate for someone to call and ask what the float is or when the next release is coming out. But I'm trying to communicate the way the man thinks. To be fair, he did tell me in our meeting that he was going to hire an Investor Relations person, but I sensed no fire to his words at all. What I mean is, it will happen, but I seriously doubt it will be soon or that it is anywhere near the top of his To-Do list.
It is difficult to describe how Dave Calkins perceives investors but perhaps the best I can do is to say that he likes investors in the abstract, just not those with fast-paced thinking who call to harass him. Dave Calkins is a man who has owned shares in a couple of mutual funds in his day but that may be the extent of his investment experience. This idea of watching a stock like a hawk and calling the CEO with questions all the time is somewhat foreign to him. My belief is that some of the communications have really hurt his feelings. Mr. Calkins did not tell me so directly, but I believe that he has received some nasty phone calls and/or emails telling him he is a poor manager, poor businessman, whatever.
There is a defensive side to his personality and I'm afraid that's bad news for us. Late in the interview, after we had talked about Visual Writer and gone over some general business questions, I told Mr. Calkins that I had reached a mental crossroads for the meeting. I told him that I had had a very nice visit but that now I was tempted to give some constructive criticism about Pacel's investor relations. I told him, however, that I didn't want to say anything if he didn't want to hear it. I could tell from his body language and general reaction that he didn't want to hear it. He gestured to the laptop and said gently, “If you have any technical criticism of Visual Writer, I'll listen to that.” After spending time with me, I'm going to guess that he knew I had no criticism of Visual Writer. So I just sat there and didn't say a word. I didn't know what to say. I had thought he was going to reply, “Yes, please do! I could use some feedback...” or whatever.
Looking back on it, I guess I had cornered him unintentionally. After all, there was no way he could say to me, “No, I don't want to hear your constructive criticism” so after a brief moment he said, ”yes...all right..”.
So I told him in as gentlemanly a way as possible, that it looked like he didn't know what he was doing with Investor Relations and Public Relations. I told him that one of the PR firms he had chosen to represent Pacel had some highly questionable clients and to see PLRP grouped together with potential scams was most worrisome. Also, it appeared that he was giving PR money away blindly. In perhaps the most dramatic, and potentially offensive, moment with regards to my conduct, I made this gesture where one hand covered both my eyes and the other hand made this “push” gesture, as if I was pushing away a pile of money. I said, “This is what it looks like your doing.”
I am happy to report that he took my speech in good stride. Like I say, I doubt he was happy to hear it, but he came back shaking his head with a look that said, “Hey, mistakes may have been made, but come on!”
What he said was (not verbatim, just my memory): “I can understand why we are perceived that way, but our PR firms are under pay-by-performance agreements. There are people out there who will not be getting the money they expected and I have been getting on their case to find out what's going on. These contracts I set up are year-long commitments, but there's no guarantee I will renew after the year is over. Also, I do plan to hire an Investor Relations person for the company.”
And that about wraps up the conversation. We each ended up with good footing.
Dave Calkins is a man who, in my opinion, is dissected well in terms of his cares, and non-cares. As I mentioned above, he doesn't care at all about this daytrader, “Where's the next PR” mindset (I'm not knocking that mindset! I have it myself! Hopefully, the new Investor Relations person will have it). But what does he care about?
He does care about Visual Writer. It's his baby. He's not particularly in love with Visual Writer--it's not his #1 joy in the world, but he does care about it. More than Visual Writer, he cares about his customers and clients. What are they going through? What can he do to help? If you are a customer, you will certainly have a different experience of Dave Calkins than if you are an internet-stock investor.
But there is a care which surpasses his fondness for Visual Writer and his love for his customers and that is his determination to meeting revenue predictions. I have heard it on the phone with him and I have seen it in his eyes--when the topic is revenue goals he is as focused and sincere as a doctor who is performing open-heart surgery on his wife. If I were to hand-pick someone to handle the Pacel-Must-Meet-Its-Revenue-Goals charter, I do not see that I could have a more impassioned advocate for the job than Calkins.
In fact, if for some reason you want to hurt Calkins feelings, you could do so by calling him up and saying, “I do not believe you care about meeting your revenue predictions.” It would be as if someone was speaking to you and said, “I do not believe you love your wife!” or for you women, “You do not love your husband!”. Your reaction might be fury or hurt or sadness...or you might just laugh it off as a remark from someone who obviously doesn't know what he's talking about. In any event, it would cut. And that is my read on Calkins determination and, if I may say, passion, to meet revenue goals.
I'm going to leave with a happy ending, and that ending is this: Slowly but surely, I think Calkins is going to change before our eyes. He said to me in the meeting, “You know, I didn't know it was important to release news at a particular time. For me, a PR is just an update on how the company is doing.” When saying this, Mr. Calkins' underlying tone was: “I now know to put the releases out at the right time. I'm learning.”
One final, final note: What does Dave Calkins look like? I'd put him around 50-years-old, but he looks a little older because of his white hair, beard and mustache. He's about 5'11” with a little pouch at the belly (no insult intended, I have a pouch, too). There is no celebrity that he resembles but I've given it some thought and will share that if you took a cross between Anthony Hopkins in “Remains of the Day” and Louis Rukheyser of “Wall Street Review” you'd be heading in the right direction. How's that for a description!
Take care all,
See you around,
Chris
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