Through yesterday, 662 US companies had reported earnings since the reporting period began with Alcoa’s release on July 12th. From today through the end of earnings season (Wal-Mart’s report date on 8/17), 1,518 companies will report. Tomorrow and next Thursday will be the biggest earnings days, with 250 and 275 companies reporting, respectively. At the start of last week, the beat rate was 73%, and it has trickled slightly lower to its current level of 71.1%. This season’s beat rate is currently 9 percentage points higher than the average of 62% since 1998. Through yesterday, 78.8% of S&P 500 companies had beaten expectations. Interestingly, the high beat rate for the S&P 500 hasn’t translated into better stock performance. The average one-day change for all stocks on their report days has been +0.55% this season. For S&P 500 stocks, the average one-day change in reaction to earnings has been -0.34%.

Courtesy of Bespoke Investment Group

http://www.bespokeinvest.com/

Some simple algebra will tell you whether or not the institutional investor you are meeting with is likely to buy your stock.

The average portfolio will have about 80 positions. So that means a $250 million fund is investing about $3.1 million in each position. Now taking into account that most institutions will resist owning more than 3% of your company suggests that your market cap must be at least $104 million ($3.1 million position / 3% ownership stake) for there to be a good fit. A $500 million will likely be looking at stocks with a $200 million market cap as a minimum, and so on.

Is this always the case? No, but it gives you some very good parameters for understanding which institutions you need to lean hard on, and which ones to call once you’ve met your growth objectives.

No matter how well your company is performing, the ability to attract new investors will always depend, in some measure, on the ability of the CEO or CFO, to make a compelling or persuasive presentation. It’s not that style wins out over substance, but rather that style is an integral element of success. With that here’s five key presentation strategies to keep in mind when you are presenting to investors.

1. Keep it brief. Twenty minutes is considered the de factor standard for an IR presentation.
2. Tell a story. Nothing captures an audience’s attention more than a story. A customer, a client, a vendor, an employee . . . anything which epitomizes the character of the company.
3. Use, don’t abuse visual support. Your slides should give cadence to your remarks, not the other way around. When you are developing your slides think in terms of creating billboards with simple, straightforward messages.
4. Smile. Sounds odd, I know, but it’s hard to support an executive that doesn’t look like he or she enjoys the job very much.
5. Handle questions very, very carefully. Just because someone asks what amounts to a dumb question doesn’t mean they wouldn’t be a great long term holder of your stock. Treat every question like it’s a good one, and give it your best answer.

Remember, if you are a small cap company, your presentation is where the rubber hits the road. So drive hard, but drive with care.

As we celebrate our nations birth we all have much to be thankful for.  Some summers are better than others to take a brief holiday. For example, we have few fond memories of the summers of 1997 (Asian crisis), 1998 (Russia & LTCM), 2007 (start of the subprime bust) and 2008 (pre Lehman sell-off).

In fact, for all the talk about how September and October are the cruelest months, we have come to await July and August with dread. Looking at this summer, it is quite obvious that we face a number of events which could lead the market to either cheer or jeer.

Yesterday gold fell a staggering $36.30, or 3.5% per 100 troy ounces. The dollar, another safe haven asset, dropped 2%. Some analysts have suggested gold’s move was the result of a large fund unwinding a position by selling gold and buying back the euro. Yesterday’s action was the battle between the “it’s a commodity crowd” versus the “it’s money stupid” folks. Put another way, if you believe that we are in a deflationary cycle, and you believe that gold is a commodity only, then its price must go down relative to currency during deflationary meltdowns.

If however you believe that gold is not a commodity, and that it is money ie. a currency and a store of value,  then you believe it should hold value, or even appreciate in a deflationary spiral. The numbers from the US today on housing starts (record 30% drop) and the ISM manufacturing index are just the latest in a long and growing list of indicators that are headed in one direction.  South.

The stock market knows this with a double-digit drop as of late, but the real signs are in the bond market. Ten-year bond yields under 3% should be considered an omen. Nothing good will come from these lower interest rates.

Our political leaders must be scared. Obama, Geithner, Summers and cronies are not blind. They may be publicly ignoring the signs, but privately they must be sweating big time. Their hands are tied. The Administration tried to get Congress to pass an emergency-spending bill to support the states and extend unemployment benefits. As of last night that effort failed.  Senators just said “no”.  It would appear that we are about to fall off of a cliff, double-dip, head south, whatever you want to call it.

More federal debt and spending is not a solution. Maybe this effort failed because our Congressional representatives have come to the conclusion that if they vote to spend our money they simply will not get re-elected.

Bull markets follow bear markets.  Believe it.  America will dig deep and come out of this in better shape and be more responsible and accountable.  May the 2010 July 4th holiday be your best ever!

-Dean Parisian – Chippewa Partners