Quarterly Communications & its Timing

In the last few days I have been thinking and debating about the timing for quarterly communications to reach existing investors. Here I am not talking about the press releases in newspapers or investor presentations sent only to institutional clients. Its also about the timeliness of the communication received by other investors – read retail investors.

What should be the ideal time for them (retail investors) to receive these newsletters or communication? I believe the ideal time is three days with one day for the printing and two for the postal communication to reach the investor. As a retail investor I don’t think it is too much to expect. We should remember that news articles and research reports are available to them by the next day, and hence I believe that any delay beyond three days does not serve the purpose of retail investor communication.

I also believe that the communication to retail investors (as compared to institutional investor communication) needs to be in easier to understand language and in a simple two page format. Anything more and the investors’ interest in reading it is lost.

When I write and design retail investor communication, I try to stick to the two-page rule with the following sections

1. Key highlights – business and overall financial performances
2. Segmental highlights and results
3. Reasons for deviation from expectations of the management
4. Management’s perception of the outlook for the rest of the fiscal and the next year

An additional page can contain the reported financial results for the investors’ ready reference.

In India, a lot of the retail investors are now web and email savvy. Corporates should start accepting requests for email communications from both investor and potential investors. I know a few corporates already do this, and this I hope catches on with the others.

To sum up, I believe and encourage all my clients to use my two-three rule, i.e. keep the communication no longer than two pages and do not delay it beyond three days.