Read between the lines. See
whether people have terms
that show a lack of conviction.
They’ll say something like, ‘We
hope to achieve this,’ or if you’re
talking to someone they might
say qualifiers, where people put
something in front of the statement that minimizes the power
of the statement. You have that
in writing or verbally.
You’re looking for clusters of
movements. They call it have an
‘anchor shift.’ They shift in their
seat in a demonstrable way and
maybe touch their face. They’ll
be doing three or four things at
once that give you a feeling that
they’re very uncomfortable.
They’re often a sign that people
aren’t being candid.
Ask presumptive questions. If a
company is in an industry where
there’s big-time problems, you
might try to talk to them first in
a sympathetic way and say, ‘We
understand that you’re facing
gale-force winds, and it’s got to
be tough for you, and in this
environment, we’re guessing
you’re probably going to earn
$3.25 a share at best, down from
the $4 estimates we had.’
Giving the presumption that
they’re going to earn less than
what they anticipated, you
learn a lot by how they
respond to that. They say,
‘Jeez, there’s no way we’re
going to earn $3.25,’ or maybe
they’ll say, ‘If things continue
to be as tough as they are out
here, maybe that will be an optimistic number we’re looking at.’
Make people comfortable. Get
people warmed up that you’re
not there as a confrontational
Woodward and Bernstein investigative reporter and that you’re
trying to develop some trust and
serve shared perspective with
the people you’re talking with.
Get people away from their
offices. Meet with the management team if they’re in town
and have a drink; go to lunch. …
You develop a different kind of
relationship when you get
someone away from the office
and the formalities of an interview and establish a real friendship that can be helpful.
Ask better questions. Do your
homework beforehand. Be prepared to understand the key
issues you want to talk about, so
you can zero in on and follow up
on the key point and not just ask
a laundry list of 20 questions, and
ask those 20 questions no matter how the conversation goes.
Focus on what seems to be the
key issue that drives long-term
profitability for the business.
It’s trial by fire, by watching
other people do it, and have a
coach come in and help you
hone your skills. When we go
out to visit companies, we try to
talk afterward about what were
the good questions, the important questions, the questions that
weren’t so good and help people
be better at it. Hopefully, they
learn by observing the way we
do it.
HOW TO REACH: Ariel Investments LLC, (312) 726-0140 or www.arielinvestments.com
