Articles about stocks written by money managers, industry experts, or smart retail investors -- namely "non-journalists" -- pose opportunities and challenges for investor relations professionals. IR expert Elaine Stattler asked me about these issues in an interview to be published in the upcoming issue of Investor Relations News.
Here's the full text:
An Interview with Seeking Alpha CEO David Jackson
Seeking Alpha is the largest source of stock market opinion and analysis on the Web. It covers more than 5,000 stocks, publishes over 160 articles per day, and has more than 400 regular contributors.
After only two years, Seeking Alpha is catching up to sites like TheStreet.com (TSCM). It’s the main provider of stock market opinion pieces to Yahoo! Finance (YHOO). It also just rolled out a partnership with E*Trade (ETFC), and is expecting increases in readership as the year progresses. From an IRO’s [investor relations officer's] perspective, this means that Seeking Alpha is heavily read by institutional and sophisticated retail investors - and they move stocks.
To find out how IROs can best take advantage of this expanding resource, IRN recently interviewed Seeking Alpha chief executive officer, David Jackson.
IRN: How can IROs use Seeking Alpha proactively for investor relations?
Jackson: There are two ways to get your story out using Seeking Alpha. First, each quarter, we publish transcripts of more than 2,500 companies’ conference calls for free to readers. Those transcripts appear on Yahoo! Finance and are searchable by sector, by theme, and by keyword. If we don’t publish the transcript of your company’s quarterly call or investor conference presentation, and you want to raise your visibility in the investment community, call us. Second, we offer online question and answer sessions with our readers. We’ll ensure a courteous atmosphere where readers can interview management about their company.
IRN: What is Seeking Alpha’s relationship to blogs?
Jackson: We publish two types of content: our own news and transcripts, and articles from our contributors about stocks and the market. Many of our contributors are money managers, industry experts, or smart retail investors who have their own blogs. As a result, we’ve become the largest source of stock market blog content on the Internet.
IRN: Most IROs are extremely suspicious of blogs. Bloggers are often anonymous, they don’t perform proper fact checking, and they might publish negative articles to manipulate a stock.
Jackson: Those concerns are legitimate, but they need to be seen in context. The financial media landscape is changing. For years, journalists working for the leading financial Web sites have pumped out huge volumes of articles in an attempt to cover thousands of stocks. Those articles are often rewrites of press releases that add insufficient value. Many readers are sick of that. They want something more thoughtful, opinionated, and actionable. That’s why our opinion and analysis articles, some of which are from blogs, are so popular.
IRN: Just because blog content is popular doesn’t mean it’s safe or admirable.
Jackson: Correct. The key challenge is: How do you find the blog articles that are high quality and high integrity, and filter out the articles that are low quality and low integrity? This challenge is exactly the focus of Seeking Alpha. We have a team of editors who review every article submitted to us. We ascertain that the authors are legitimate, that they disclose positions in stocks they’re writing about, and that their articles are high quality.
IRN: Isn’t it a problem that your contributors may own the stocks they’re writing about?
Jackson: We like the fact that our contributors have “skin in the game”. Investors who own stocks they’re writing about have typically done a ton of research, and they care a lot about whether they’re right or wrong. They write articles that are opinionated, actionable, and help other investors to interpret the news. As long as an author discloses that he or she has a position in the stock under discussion, isn’t trying to manipulate the stock, and isn’t misrepresenting the facts or spreading baseless rumors, the risks are limited. We think that our contributors take positions in stocks because they believe the arguments in their articles, not the other way around. This, by the way, has long been recognized by the financial media industry. That’s why most Barron’s articles are based on interviews with money managers, and why CNBC frequently interviews investors.
IRN: Seeking Alpha often carries negative articles on stocks. What can a company do if Seeking Alpha publishes a negative article about its stock?
Jackson: First, check the article for any material inaccuracies. If you find any, contact us immediately and we’ll correct the article. Second, if you think the article has simply failed to do justice to the great things about your company and your stock, consider submitting an article in response, or request one of your shareholders to submit an article to us outlining the bull case for the stock. Our mandate is to be a neutral platform for the intelligent discussion of stocks, and we want to provide our readers with a range of opinions on each stock. Third, think about using Seeking Alpha more proactively for investor relations.
IRN: Thanks David. IRN will get the word out!
Jackson: Thank you!
Full disclosure: short TSCM. But not because I'm bearish on the stock; I think TSCM is a great company, I like the way Jim Cramer thinks about stocks, and I think they've done a great job growing their business. Rather, I'm short TSCM because I've spent the last three years building Seeking Alpha, and I want to hedge my stake in it. TSCM is the closest publicly-traded proxy to Seeking Alpha. Here are my views about hedging your job exposure.