MANAGEMENT MEETING MANUAL ✔️ It's really one of the most bizarre rituals on the buy-side. The still wet behind the ears, 23 year old buy-side junior interrogating the 55 year old titan of industry on business strategy. One of my first assignments on the buy-side was to fly
to London and meet with Paul Polman, the new CEO of Unilever, to assess whether he had a viable plan to turn Unilever around. I had been prepped by my team with an extensive question list. I was in the meeting with 10 other hedge fund sharks, and Paul himself was quite
an intimidating figure to me. Ultimately, I completely whiffed and asked exactly zero questions off my list, sneaking out the back of the room after, embarrassed. But I would learn. I received Maverick's internal management meeting training which included multiple days with BIA
(taught by former CIA agents) on Strategic Information Collection with an emphasis on lie detection. Even better, I sat in hundreds of meetings with my senior analysts, watching the maestros at work and taking copious notes on the artistry of CEO interrogation. In group meetings
and NDRs, I've shared meetings with a who's who of great healthcare investors (sharing a meeting w/ Keith Meister was always my favorite. I'd get my popcorn ready). So, I've learned a lot over 14 years and 3,000+ management meetings. Let's dive in. WHY MANAGEMENT MEETINGS?
What's the point? Buffett just sits in Omaha reading 10-Ks ignoring management, shouldn't I? It's actually a viable question. I've heard many great investors over the years ponder whether all the time & effort spent on management meetings is worth it (usually after they just
got walked off a cliff by a CEO). With the limitations of Reg FD, companies are not technically allowed to discuss current quarter fundamentals. Do I believe it is possible to deliver exceptional investment results without ever talking to management? Yes, absolutely. BUT, have
management meetings aided my investment results over time? Absolutely. Yes. There are two core reasons that investors meeting with management, often incessantly. TO UNDERSTAND. Global businesses are highly complex organisms filled with regulatory uncertainty, competitive
volatility, unpredictable input costs, and oscillating demand. Sitting face to face with the CEO or CFO gives you an amazing opportunity to cut through the noise and drill down to the key levers of the business that really matter. I met with Mark Bertolini of AET probably 15
times between 2012-2015, and he gave me an absolute masterclass on the Affordable Care Act and what the implementation would mean for profit pools in his health benefits business. I was an absolute sponge. Those insights were critical in informing my investments across the HC
services landscape. TO DETECT INFLECTIONS. The stock market is a data extrapolation machine. Market participants tend to assume latest financial trends will continue forever. When those drivers inflect, the market has to re-price the stock, often violently - so, identifying
inflections, particularly that defy currently baked in price, is a key driver of alpha generation. While Reg FD does limit disclosures, it is very hard to walk away from a 3-day investment conference, meeting 40 companies, without a pretty strong view of how the ecosystem
is evolving. The "body language" as hedge fund dorks are known to call it. Body language is VERY SUBTLE. During 2020/2021 I was meeting incessantly with COVID testing companies. One particularly CEO was jumping out of his chair bullish for 5 meetings in a row, then the 6th
meeting was "just bullish". My modeling & R/R lined up, but that early '21 meeting was the critical trigger to go all-in on my COVID testing short position. A CRITICAL NOTE ON COMPLIANCE Whenever I felt like I received immediately investible information from a management
interaction, I would vet that data point with internal compliance. I would highly recommend you do the same!! WHY DO COMPANIES MEET WITH US? CEOs & CFOs often dedicate 10-30% of their highly valuable time meeting with investors. Does this make sense? It's debatable. Many
companies I highly respect ($UNH) shun the conference circuit and meet with investors sparingly, preferring to focus on running the business. But that is very much the exception. Ultimately, it boils down to the TYRRANY OF THE STOCK PRICE. As a CEO, whether you like it or
not, the stock price is your report card. Deliver stock price gains and not only do you get incredibly wealthy (a strong incentive) but you help your 10,000 employees who own stock options generate wealth, make your investors happy, which makes your board happy. You're a GOD
walking through the halls of HQ. Contribute to your stock dumping 80%, and the inverse is true - activists might come for your head. Management teams believe that getting out and telling the story can contribute to a higher P/E ratio. That can be true in some instances, and
certainly the sell-side has convinced most managements that is true (how else will the brokers make their $ if they don't organize mgmt meetings?), but is probably overdone. I can't count how many late day conference meetings I've been in where IR/CFO/CEO comment on the stock
being up 2% that day as a sign the meetings went well (despite the market & their industry group also being up 2%...) So, understand, the CEO is taking his/her valuable time to meet with you out of pure corporate self-interest. You aren't trying to be manipulative, but keep that
self-interest in mind as you go about your meetings. WHERE WILL YOU MEET? Corporate access is a pretty well-oiled machine. Equity sales people reading this, how many times have you heard a client say "we primarily care about corporate access?". Hedge funds pay the street to
set up management meetings, usually explicitly on a per click basis. So the bulk of corporate access is organized by the brokers: IPO roadshows, non-deal roadshows, deal roadshows (where there is follow-up security to sell), headquarters visits (always my favorite), and
nearly endless broker conferences (the JP Morgan HC conference is its own tweet...). There is opportunity for direct corporate outreach, usually with IRs, but unless you are a huge investor it's generally more difficult to get the CFO/CEO on the line. MANAGEMENT MEETING PREP
Prep is critical. Walking into a management meeting knowing nothing is pretty much a waste of time. I would like to at least have my quick dive done for my important meetings. See thread below. https://t.co/c4lsabrK2C Also, it is very much my habit to have my earnings model
on a laptop while I conduct the meeting. I can use the model to guide the discussion and generate follow-ups, always looking to translate the commentary into likely financial outcomes and looking for situations where a beat or miss is likely. CONT'D
A FEW PREP POINTS - Familiarize yourself with the 3 key drivers (see quick dive thread). If you aren't spending 75%+ of your time here in the meeting, you are doing it WRONG - Assess the narrative. I will tweet on this more deeply, but generally you are trying to understand the
current debate on the stock/industry, what the bulls/bears are saying, and what it would take the average market participant to buy/sell the stock. Read a bunch of sell-side research, check in with specialist sales, etc. - Baselining (also a future tweet). A baselining exercise
involves walking through prior mgmt meeting notes and public statements on IR and past conference presentations. You are looking for patterns of communication (quants do this with NLP, be a human NLP machine). - Understand who you are meeting with and what questions might be
appropriate. Don't be the person wasting visionary CEO's time asking about sequential SG&A. Save that for an IR follow-up. - Think through the exec personality (to the extent you know). Hot buttons? Start with topics they want to discuss. - Have a strong view of where consensus
lies, both sell-side and buy-side. QUESTION LIST After you have prepared thoroughly, organize your question list. Start with the 3 Key Drivers and list them on the top. Have them in Bold on your list to make sure you hit them if time is running short. Build questions around
these 3 topics. Think through the flow of the meeting in advance, particularly if it is a true 1 on 1. Prepare potential follow-up questions on each, and prepare for the fact that you may have to ask the same question in 4 different ways to get the information you need. Prepare
2x as many questions as you need just in case. It's SUPER awkward being in a 3x1 45 minute meeting where no one has any questions after 15 minutes. SAMPLE QUESTIONS Listen, let's be honest - what you as an investor want to know is, will the company beat/miss and are the KDs
inflecting positively/negatively, on top of your general deep understanding questions. You can't come out and ask the CEO/CFO that directly. So there is a dance involved. - "From an industry perspective, how are things going?" - "How do you think about industry growth looking
out over the next year?" - "How is the current macro environment affecting the industry?" - "What is normal seasonality for your business in a Q3? Are there any reasons we should expect things to differ from normal this year?" - "What would have to happen for you do to X next
year for EPS?" - "If you missed your stated goal of X, what would be the key factors?" - "What do you think the street is missing when thinking about your company over the next year?" - "Is there anything we didn't touch on that we should have?" CONDUCTING THE MEETING
Run through your question list. If sharing the meeting with other investors, be mindful of not monopolizing the meeting (i'll discuss lateraling at some point...but where I always scouted for good laterals were young analysts who asked great questions in meetings)
CONDUCT POINTERS - be polite, respectful, and grateful - listen very closely (put phone away) - try not to interrupt the management team - ask concise questions; you want them to talk - qualitative is good, quantitative is better - think 2 steps ahead at all times
- be flexible within your script. It's a dance! - do not ask leading questions (sometimes it's what they don't say) - make sure you push! Ask questions 5 different ways in order to get what you are looking for. Only back off when you see steam
- focus on critical drivers vs. noise. What does it take to buy/sell the stock? - ask bottom's up questions in order to back into the big picture - use a building blocks approach. Mgmt won't discuss EPS, but they might discuss elements of revenue, SG&A, below-the line
- use consensus or bears as the boogeyman. don't make the meeting confrontational - send a thank you follow-up note BEST OF LUCK WITH YOUR MEETINGS!!!