So many AGMs, so little time for investors

Solution to all this? Own less companies - a concentrated portfolio haha. Or else own companies with different year-ends. Perhaps Mano Sabnani can consider that? Owning >50 companies is akin to buying the index actually!

The Straits Times
www.straitstimes.com
Published on Apr 19, 2013
So many AGMs, so little time for investors
Nearly 400 firms to hold AGMs from now till April 30; call for SGX review

By Rachel Scully

NEXT Friday, investor Mano Sabnani has 22 annual general meetings to attend in a span of about 10 hours, in locations spread out across the island.

The chief executive of financial consultancy Rafflesia Holdings, who has an investment portfolio of more than 50 companies, is not pleased as he has to give up attending some of them.

"I decided to attend the AGM by Overseas Union Enterprise at Mandarin Orchard at 10am. So I'll have to miss out on the AGMs of CapitaLand, YHI International and Nordic Group, all of which I have shares in, because they are happening at the same time," he said.

Close to 400 companies will be holding AGMs from now till April 30, the deadline for companies with a Dec 31 financial year end.

The problem is most pronounced on Friday next week. A check of the SGX website shows about 100 AGMs will be held that day.

From 9am, up to 20 firms will be having their AGMs every half hour in the morning or late afternoon, making it challenging for a shareholder with a diversified portfolio to travel from one location to another.

The trend of AGMs clustering and clashing in April has made it more difficult for shareholders to attend them, said Mr David Gerald, president and chief executive of the Securities Investors Association (Singapore), or Sias.

"This serious clustering of AGMs makes it difficult for shareholders holding shares in multiple companies to attend AGMs. Some companies with poor governance may get away with bad results and unscrutinised resolutions," he said.

"This is particularly important when shareholders want to ask questions like why directors are paid such high fees when the company is losing money or not giving out dividends."

Mr Sabnani suggested that the SGX ensure the AGMs are spread evenly across April's working days.

"AGMs could be scheduled in time lots once every two hours from 9am till 7pm. And up to five or six companies can take up each slot on a first come, first served basis.

"This will reduce the stress not only on shareholders, but also for independent directors, auditors and public relations companies who have to be present at AGMs," said Mr Sabnani.

Alternatively, companies could do more to help shareholders get up to speed, suggested Mr Gerald.

"Companies can adopt e-solutions such as webcasting their AGMs live and also produce good-quality AGM minutes. The Acca-KPMG Stakeholder Communication study in 2011 and 2012 showed that only about seven listed companies published detailed minutes of their AGMs," he said.

Mr Gerald also agrees that SGX should step in and introduce new guidelines.

"The regulatory and listing requirements relating to the maximum time allowed for companies to hold their AGMs and to announce results must be given a relook," he said.

"Perhaps SGX could consider allocating the dates and times and ensure a cap is imposed on the number of companies holding AGMs on any one day.

"Companies should also plan ahead and publish their AGM dates as early as possible so as to enable shareholders to plan early and appoint proxies to attend meetings on their behalf."

rjscully@sph.com.sg

IMO, the more practical solution is

"Companies should also plan ahead and publish their AGM dates as early as possible so as to enable shareholders to plan early and appoint proxies to attend meetings on their behalf."

(19-04-2013, 07:44 AM)Musicwhiz Wrote: Solution to all this? Own less companies - a concentrated portfolio haha. Or else own companies with different year-ends. Perhaps Mano Sabnani can consider that? Owning >50 companies is akin to buying the index actually!

actually i wish the AGMs will post a video recording online. Most of the time i just want to see the CEO's physical response to Q, the physical travelling is just a waste of time.

(19-04-2013, 07:44 AM)Musicwhiz Wrote: Solution to all this? Own less companies - a concentrated portfolio haha. Or else own companies with different year-ends. Perhaps Mano Sabnani can consider that? Owning >50 companies is akin to buying the index actually!

My initial focus was on Mano's number of companies too. 50! That's a hell lot of businesses to keep track of. Especially when academic studies show no marked improvement in diversification after something like 30 counters.

Since the STI is more or less made of the 30 biggest companies (with liquidity as another consideration) listed on the SGX; If all Mano's companies form an index, it'll be even more representative of the SG market than our STI.

I agree with CityFarmer that the more practical solution is to schedule the AGM dates way earlier and allow proxies to attend in any case of a schedule conflict. There's simply too much admin cost in ensuring each company has a standard AGM time slot to themselves. Even if we set this to the top 100 market cap stocks in SG, it will mean close to 2 months of non-stop AGMs assuming 3 meetings per working day. [I am assuming 2 hours won't be enough given the average AGM time span for the past year]

In Mano's case, he can simply schedule a call through his company Rafflesia Holdings if he needs to address urgent issues.

If it's just about directors' pay, IMO, it won't be worthwhile to attend at all. What are the chances for the directors to withdraw the resolution? To me, this should be sunk cost or seen as red flags [if the marginal increase is huge] in one's analysis. And if one's portfolio has 50 stocks, the diversified approach should warrant no need for an active monitoring of the companies. So his process and asset allocation do seem to contradict.

IMO, the most important part during the AGM is the informal meeting with mgmt during the refreshment period. We can fish out more info from that than those regarding dividends/directors' pay/etc.

Yes, I also agree the AGMs should have a video recording to it. In fact, Thailand's SET does do a good job at this - with compiled video and presentation slides from participating companies. We do have some from TodayIR.sg [http://sg.todayir.com.sg/en/webcast.php] but the depth is limited. IMO, they should enforce it for the ST index companies. That said, shouldn't info opaque-ness be good for value investors like us?

(19-04-2013, 11:19 AM)kazukirai Wrote:

(19-04-2013, 07:44 AM)Musicwhiz Wrote: Solution to all this? Own less companies - a concentrated portfolio haha. Or else own companies with different year-ends. Perhaps Mano Sabnani can consider that? Owning >50 companies is akin to buying the index actually!

My initial focus was on Mano's number of companies too. 50! That's a hell lot of businesses to keep track of. Especially when academic studies show no marked improvement in diversification after something like 30 counters.

Since the STI is more or less made of the 30 biggest companies (with liquidity as another consideration) listed on the SGX; If all Mano's companies form an index, it'll be even more representative of the SG market than our STI.

my understanding is that the 50 companies are in his watch list, not necessarily he invests big in each of the 50 companies.

(19-04-2013, 01:57 PM)freedom Wrote:

(19-04-2013, 11:19 AM)kazukirai Wrote:

(19-04-2013, 07:44 AM)Musicwhiz Wrote: Solution to all this? Own less companies - a concentrated portfolio haha. Or else own companies with different year-ends. Perhaps Mano Sabnani can consider that? Owning >50 companies is akin to buying the index actually!

My initial focus was on Mano's number of companies too. 50! That's a hell lot of businesses to keep track of. Especially when academic studies show no marked improvement in diversification after something like 30 counters.

Since the STI is more or less made of the 30 biggest companies (with liquidity as another consideration) listed on the SGX; If all Mano's companies form an index, it'll be even more representative of the SG market than our STI.

my understanding is that the 50 companies are in his watch list, not necessarily he invests big in each of the 50 companies.

I probably can only handle 3 or less companies in my portfolio. Kudos to anyone who can handle 30 and above!

(19-04-2013, 01:57 PM)freedom Wrote:

(19-04-2013, 11:19 AM)kazukirai Wrote:

(19-04-2013, 07:44 AM)Musicwhiz Wrote: Solution to all this? Own less companies - a concentrated portfolio haha. Or else own companies with different year-ends. Perhaps Mano Sabnani can consider that? Owning >50 companies is akin to buying the index actually!

My initial focus was on Mano's number of companies too. 50! That's a hell lot of businesses to keep track of. Especially when academic studies show no marked improvement in diversification after something like 30 counters.

Since the STI is more or less made of the 30 biggest companies (with liquidity as another consideration) listed on the SGX; If all Mano's companies form an index, it'll be even more representative of the SG market than our STI.

my understanding is that the 50 companies are in his watch list, not necessarily he invests big in each of the 50 companies.

so he went there just to chiak kopi only ah.

AGMs - the only time when you clear your doubts with the company management and hear what the management has in store for its future.

Is this guy a one man show? What are the advantages to set up a 'holding' company to manage your investment portfolio? I thought this would make you liable to taxation.