Annual General Meetings (AGM) are once-a-year events (as the name suggests) whereby listed companies book a venue, management and directors gather, and the audience asks questions about the business. Investors may feel that AGMs are held because of regulatory requirements and that companies simply go through the motion without adding much value.
However, I beg to differ on this. I have attended numerous AGMs for my own personal investments since 2005 and have gleaned a lot of useful information and knowledge as a result. Singapore still lags behind the US when it comes to being a disclosure-based regime, as much of the information found inside Annual Reports (AR) is disclosed based on necessity, and most companies (especially smaller ones) do not make much effort to disclose more information than is required. This is why AGMs can be very useful venues for learning more about businesses.
Here are three great reasons you should try your best to attend AGMs.
1. An opportunity to remove your doubts
Attending AGMs is an effective way for investors to understand more about a company. They can question anything from corporate strategies to mergers and acquisitions, and management’s replies will likely shed more light on how they intend to grow the business or mitigate risks that have cropped up.
As an example, I managed to clarify my doubts about how Raffles Medical Group Ltd (SGX: BSL) intended to grow its China business by listening to what other investors were asking management. Management shared that all new hospitals will be ramped up slowly by opening each hospital progressively, which was a strategy the company used for its initial Singapore hospital more than 10 years ago.
2. An ability to observe how management reacts and responds
Meeting management in person can also give investors clues as to how they react and respond when questioned, or when faced with challenges. The true character of a person usually comes through when faced with crises, rather than when he is sailing through calm waters.
A recent AGM I attended for Kingsmen Creatives Limited (SGX: 5MZ) demonstrated this. Even though shareholders were grilling management on why the results were poor and whether the corporate strategy was flawed or risky, management took the questions calmly and explained themselves in a clear, logical way. They did not appear flustered, impatient, or evasive. This professional behaviour clearly earned them the respect of the shareholders present as many indicated their willingness to wait patiently for Kingsmen’s growth plans to bear fruits.
3. Sharing information not found inside ARs
A third reason to attend AGMs is to glean information not typically found in the AR. Such was the case when I attended the AGM for Straco Corporation Ltd (SGX: S85), where the chairman shared more on how the group conducts its mergers and acquisition search, as well as the strict criteria management has for considering a potential acquisition.
To be clear, market-sensitive information should not be shared at AGMs. What I am referring to is information shared by management that digs a little deeper into the company’s operations, strategic decisions, and risk-mitigation techniques so as to give shareholders some insight into how management thinks and reacts to external risks and competitive threats.
The Foolish conclusion
The above three reasons should provide sufficient motivation for investors to take the time to attend AGMs. Of course, investors also need to do their own homework before attending by diligently reading the AR and also preparing a list of questions to ask management.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Royston Yang owns shares in Raffles Medical Group Ltd, Kingsmen Creatives Limited, and Straco Corporation Ltd. The Motley Fool Singapore recommends shares of Raffles Medical Group Ltd and Straco Corporation Ltd.