Thursday, 22 August 2013

Ahh reporting I've missed you so

For investment bankers, investors, brokers, fund managers and other people involved in the finance world (especially those who have anything to do with the share market), reporting season is one of the biggest times of the year.  For 'insiders' - that is the accounting, investor relations, legal and managerial teams at corporates this tends to be a little bit before reporting season as they are getting everything ready.  For the rest of us, though, everything is jam packed into 3 or 4 weeks of craziness.

Although, I could quite easily do a rant on how I am getting fat, unfit and wish I could socialise more (a la my complaints during my investment banking days) there are 2 reasons I am not going to do this:

  1. I used to be an investment banker and if I complained about 2 - 3 weeks of 14 hour days they would probably kick my ass
  2. It would be much more helpful to non-financial professionals if I did a re-cap on the best things to look at during reporting season
What is reporting season?

As the name would suggest, reporting season are the few weeks in which most companies report their results.  In the US this happens 4 times a year (as US companies have to report quarterly) but in Australia and most other developed markets, this only happens twice a year - when companies report their half year and full year results.  

Companies tend to have very standardised year ends.  In Australia most companies have either June or December year ends which means that their half year reporting occurs in either December or June as well.  Further the listing rules state that a company needs to report their results to the market within 60 days of their year end.

Companies need to do their accounts, get their accounts audited and then schedule time to meet investors etc which means that most report within a very tight time period towards the end of that 60 day window....hence the creation of a reporting season.

It's not my job...but I invest in do I keep up?

The amount of information that investors are given during reporting season is often over-whelming and investors can often get information overload.  Although brokers are constantly pushing ideas during reporting season based on new do not need to make decisions that quickly.

You have the luxury of time.  In fact last year I wrote an article on how to avoid making bad decisions during reporting season.  Basically you want to avoid making decisions based on news that you have not had time to assess.   Although it is true that you may miss some opportunities, you are also going to avoid making bad ones.  You don't need to swing at every pitch and you can watch at hundreds go by before making a move you are confident in.

At the same time you shouldn't ignore the information.  There is a lot of useful information that comes out at this point.  You get half year and annual reports and accounts, investor presentations and briefings.  If you have any more than about 5 stocks in your portfolio and you are doing it part time - the time requirement gets quite how do you keep up?

Listen to the webcasts and investor presentations.  Ignore the financial news - it adds nothing.  Listen to the webcasts of the results presentation which are often on the companies websites and other websites.  I did a post on how to get results webcasts.  Importantly listen to the questions the brokers and analysts ask at the end.  It will give you an idea of what you should be thinking about and what people are concerned about.  If you have time - the go through the reports...last!  Finding information in those things is challenging.

Because you have the luxury of time all this does not need to be done in a week or a few weeks like professional investors have to.  You can do it over months if necessary but make sure you know what is going on with your investments!

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