The information I learned by attending J2 Global's (NASDAQ:JCOM) 2001 annual meeting gave me the confidence to buy its shares, even though Wall Street had consigned the company to the dot-com junk heap. That info paid off; in a few years, J2's shares had risen roughly 40 times in value. I haven't enjoyed such gains from every meeting I've attended, but they've all been worthwhile. That's why I eagerly bought Randy Cepuch's A Weekend With Warren Buffett and Other Shareholder Meeting Adventures.
A shareholder-meeting junkie, Cepuch attended more than 50 of these get-togethers during a five-year period. The companies ranged from megacaps to microcaps, including both U.S. and foreign companies.
Making the grade
For each company, Cepuch provides a scorecard that looks at educational value, entertainment value, freebies, and food and drink. The ratings range from A to F, and Cepuch's a tough grader.
One surprise is his "F" for the entertainment value of Playboy's (NYSE:PLA) annual meeting in 2003. Cepuch's impression was that the company considered small shareholders a "nuisance." It became the only time he ever sold shares based on the vibe he got from a shareholder meeting.
Seeing a show
On the other end of the scale, some meetings resemble rock concerts. Thousands of fans attend Berkshire Hathaway's (NYSE:BRK-A) meeting to see Warren Buffett in action. Wal-Mart's (NYSE:WMT) meeting is also a spectacle, where Cepuch witnessed celebrities like Cindy Crawford, Joe Montana, Garth Brooks, and Jessica Simpson. Starbucks' (NASDAQ:SBUX) meeting is another major production, with Howard Schultz getting rock-star treatment.
Cepuch crafts each profile with a fun, wonderfully tongue-in-cheek writing style. On utility company Otter Tail (NASDAQ:OTTR), he writes: "When a company's main product is electricity, it's tough to hand out samples."
Speaking of samples, Cepuch must have a nice collection. He talks about boxes of candy at Hershey (NYSE:HSY), a $25 gift card from Bowl America, a Starbucks card preloaded with $3.50, and free T-shirts from eBay (NASDAQ:EBAY). The meetings I've been to have only handed out coffee and doughnuts.
Turning meetings into money
While the glamour and goodies are fine, I think it's more valuable to use annual meetings to find investment nuggets. This can be easier with small companies, where you can expect to have one-on-one conversations with management. You might conclude either that the company has a solid strategy, or that it truly deserves its tiny market cap.
From that perspective, Cepuch's book stumbles, covering only a couple of small caps. He also provides too little advice on what kinds of questions you should ask. Even for larger companies, he's a bit shallow on the investment advice. Cepuch is much better at explaining the legal nuances of annual meetings, particularly in discussing the inherent futility of shareholder proposals.
Keep in mind that annual meetings can often be a snooze. Don't be surprised if executives have a script and provide only vague answers to questions. Cepuch recounts one instance in which an executive accidentally read the notation "turn the page" when going through his presentation.
As we approach the height of annual-meeting season, Cepuch's timing is pretty good. While I wish he provided more investment advice, the book is still a handy reference and a fun read. It also reminds us attending annual meetings is not a bad idea -- if only for the free doughnuts.
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Berkshire Hathaway and Wal-Mart are Inside Value picks. Starbucks and eBay are Stock Advisor selections. Otter Tail is a Hidden Gems pick. Playboy is a Rule Breakers recommendation. Superior investing advice is yours free for 30 days, when you try any of our Foolish newsletters.
Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 1,817 out of 24,388 in CAPS.
