The communication and the adequacy of the Investor Relation Managers (IRM) of the Bulgarian public companies is significantly polarized. The BSE has its top performers in corporate governance with pretty collaborative IRMs, who inform the market for significant company events on a regular basis. Much to my regret this type of companies are rarity.
The predominant part of the IRMs if any indeed, are indifferent to the minority shareholders and serve primarily the major shareholders and the regulators. The idea of a strong relationship contact with analysts and investment consultants representing the investors is represented by a polite request to re-visit the already published reports and press releases, which are implemented in the analysts’ models just minutes after their release.
What the Bulgarian public companies miss is the understanding of the information necessary for a construction of a proper valuation model, which goes beyond the regulatory reporting and includes:
- understanding of the business;
- understanding of the business environment;
- the managements’ vision for development of the company;
- the production process and technologies involved.
The capital market does appreciate the depth in the transparency of any company and more and more often assign a premium for that transparency. Any public company with “transparency” close to the regulatory one, do not only exhibit negligence towards the capital market, but deepen the negative trend towards insider info trade, due to the lack of sufficient amount of public info.
3 comments:
Having watched the Eastern Europe markets for several years, I keep on wondering how do you guys ever get any meaningful piece of information.
Any hints?
Jacek
There was an interview of the CEO of Bulgarian American Credit Bank last year, where he said plainly that many people at the market in Bulgaria simply use insider information. There is a great advantage to work with local fund managers and brokerage houses in emerging markets because of this lack of official information, according to me.
Anonymous, I agree with you. Bulgaria is an emerging capital market and bears all the characteristics of these markets. BTW in any single country it is better to have a local point of contact or at least this is what my experience shows. I have been working closely with foreign investors (~90% of FFBH's clients are European and American funds), who have exposures in different emerging markets. They all prefer to work with a local intermediary.
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