When I began drawing up my plans for this blog, I knew I wanted a section where I could cover topics that were relevant to finance but didn’t quite fit the normal subject matter of personal finance blogs. More specifically, I wanted a place where I could experiment with ideas that I hadn’t really seen tackled by the personal finance blogs that I follow. The reason I am mentioning this now is because it is Earnings Season, as those of you who follow the stock market are aware, and starting next week I plan to publish a few Conference Call Recaps on stocks that I follow.
Stock Investing, particularly Dividend Growth Stock Investing, is a somewhat common way for members of the personal finance community to diversify their income opportunities. Some blogs that I follow categorize their dividend income under Side Hustles. But an essential part of successful stock investing of any kind is monitoring your positions so you can make adjustments in the case that your investment thesis changes.
The Value of Listening to Conference Calls
For me, and hopefully for anyone who takes concentrated positions in individual stocks for any length of time, listening to quarterly conference calls is a major part of monitoring my positions. The reason this is so important is that while rumors and reports are coming out on a daily basis regarding popular stocks, you get actual facts and figures from the company’s management on a much less frequent basis. The conference calls that follow quarterly earnings releases give investors a chance to get information regarding the most relevant items impacting a company directly from the CEO, CFO, and other high-ranking executives. Additionally, and importantly, analysts who are paid to follow the stock for different brokerage houses also get a chance to ask questions after the management’s opening remarks. It is during this back and forth that hot topics and press rumors are often addressed firsthand by those who know the company best.
When I invest in an individual stock, I usually have a thesis regarding that company’s future and I use the earnings reports and conference calls as a way to verify that the story is playing out as I envisioned it. Some of this can be gleaned from the actual numbers that are reported, while the rest of it comes in the form of management’s comments and answers to analysts’ questions during the call.
Documenting Major Talking Points/Takeaways
While the actual earnings numbers can be found on any site that covers the stock market, it is much more difficult to find commentary on the discussion that takes place during the conference call. Sometimes you can find a transcription of the call a day or two later, but I have found that those are not always accurate. More importantly, I find it almost impossible to detect voice inflection and sarcasm through a call transcript.
Because of this, I will be writing up a summary of the conference calls for the companies I follow as well as some of the key takeaways as they relate to my investment thesis for these companies. They will also help serve as a reference point for me to review before listening to the next quarterly call for these companies. My first Conference Call Recap will focus on Apple, who reports earnings after the closing bell on Tuesday, April 26th.