Book Review: "Winning Investors Over" Is a Timely Survival Guide for IROs, CFOs and Others

Posted on Nov 15, 2011 in IR Therefore I Am | 2 comments

As I read “Winning Investors Over: Surprising Truths About Honesty, Earnings Guidance, and Other Ways to Boost Your Stock Price,” I kept thinking to myself that I wished this book had been written years ago for it would have saved me a lot of time and trouble. Penned by the esteemed Professor Baruch Lev, one of our profession’s most important voices, this book is a survival guide for regaining and sustaining investor confidence and he systematically outlines ways in which corporate managers can do so.

In his book, Prof. Lev draws on considerable research in finance, economics, accounting and management to analyze a broad spectrum of issues and strategies related to managers’ relationships with investors along with the consequences of their interactions and offers practical solutions to improve those relationships.

In “Winning Investors Over,” Lev presents authoritative, often surprising advice for dealing intelligently with Wall Street-and boosting your company’s earnings and stock price. Through rigorous data analysis and real-life cases, Lev shows how to: (1) Understand and address investors’ concerns to secure ongoing funding and support from the capital markets, (2) Deliver disappointing news effectively to investors, (3) Build, rebuild, and maintain credibility on Wall Street, (4) Buy time for your company’s recovery from activist shareholders and hedge fund raiders, and (5) Structure your compensation to win shareholders’ support. “Winning Investors Over” demonstrates that despite the uncertainty that characterizes Wall Street today, you can still establish a mutually beneficial, long-term partnership with investors.

Prof. Lev also debunks a number of “myths” in his book. Most notably, the issue of providing earnings guidance comes under rigorous examination. It is Lev’s view that, contrary to objections from investors such as Warren Buffet, earnings guidance actually prevents stock prices from straying from their intrinsic value and mitigates lawsuits. He also takes on the notion that overpriced shares are good for companies by providing evidence that inflated prices are a recipe for investor disappointment.

The book makes use of Lev’s original research and that of many other leading finance and economic scholars to provide insights and strategies for avoiding setbacks in the capital markets and riding them out when they do occur. “Winning Investors Over” contains numerous examples drawn from real life as Lev dissects the activities and investor strategies of companies such as IBM, Deere & Co., GE, Dell, and Netflix, among others.

The key for executives is not to ignore Wall Street but to be smarter in their dealings with it. Recent research offers clear lessons about what investors value. Above all, they want honesty and transparency. Through prudent use of earnings guidance, pro forma earnings, and conference calls, executives can convey solid, credible information about their corporation’s prospects. Investors will reward them if they do.

Having heard Prof. Lev speak and read some of his previous writings, the publication of this book adds to a lustrous career. Provocative and practical, this book is the definitive guide for developing a winning strategy for the capital markets.  “Winning Investors Over” has a permanent place on my bookshelf and is a must-read for anyone engaged in the practice of investor relations.

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