Shareholder Letter Revelations: Can You Trust the Leadership?
The one window into a CEO's perspective and goals is the shareholder letter contained in the annual report. But upon reading one, you might find that you can't understand what the CEO is trying to say. Often, shareholder letters are riddled with jargon and glossy prose that convey no information. Six of the most popular CEO letter clichés:
Share this article
- Talented people,
- Global presence,
- Market knowledge,
- Financial strength,
- Leverage competitive advantages, and
- Create significant value for our shareholders.
These are all important concepts. But so many generalities and so few specifics quickly become meaningless to any reader. Not only do such clichés fail to inspire trust, they should cause a prudent investor to wonder if the company has something to hide.
When an annual report arrives in the mail, go directly to the CEO letter, take out a red pencil and circle clichés like "to create shareholder value," and other words that don't make sense or add to your understanding of the business. When you have finished, look at the page. If you see more red than black, consider yourself warned.
To read more, please become an AAII member or CLICK HERE.