Last week Harvest Capital Strategies manager Andrew Kaplan tried to attend an analyst meeting for First Solar, which he says he was invited to. Upon arriving at the Westin in New York, where the event was taking place, Kaplan received a badge, grabbed himself a Diet Coke, and waited for the conference to begin. Unfortunately, Andy never got to find out what the company had to say for itself, because he was approached by an IR person who informed him he need to leaving the building ASAP. Kaplan e-mailed First Solar officials to ask why he was barred and request that the company pay his $9 taxi fare from the hotel back to his office on Park Avenue, where he listened to the analyst conference on the Internet.
Andrew Kaplan’s letter to FSLR managent is posted below.
Sent: Thursday, December 17, 2009 12:40 PM
To: firstname.lastname@example.org; email@example.com
Subject: Cab Fare & an Offer
Dear Mr. Meyerhoff and Mr. Polizzotto,
Several weeks ago I received an invitation to your December 16th analyst event in New York City. As directed, I confirmed my attendance with Ms. Mannion at your investor relations firm.
Imagine my surprise when I attempted to enter the auditorium last evening only to be informed by Ms. Mannion that First Solar management had instructed her to eject me from the premises.
While, I suppose, you have the right to refuse admission to your event to anyone whom you have reason to believe might be disruptive, I find it hard to see how I might fit into that category. I was dressed nicely. My hair was combed. I have always conducted myself with decorum at other events, and my questions to management members have always been pertinent and respectful.
The harm I suffered at your hands, other than the embarrassment of having to explain my departure to colleagues, was minimal. My investors did incur a $9.00 taxi cab expense because I was forced to hurry back to my office to hear the webcast of the event, and I believe it would be fair for you to reimburse them. After all, you did invite me and, if you wished to rescind the invitation, it would have been common courtesy to do so BEFORE I traveled to the event.
More than the $9.00, though, I’d appreciate an explanation. I am negative on your stock, I do currently hold a short position, and I have communicated some of my thoughts on the challenges your company faces to other investors with whom I am friendly. Perhaps in your mind this is sufficient reason to bar me from your event. Just the very thought of having someone in the audience who disagrees with your outlook may be too distasteful for you to tolerate.
I’m sure it goes without saying that that’s not the way most successful management teams operate. Generally, they welcome the opportunity to provide their viewpoint to analysts who disagree with them, because they believe their case to be persuasive. And, if they don’t succeed, it doesn’t matter, because in the end the stock will follow the company’s results.
Managements who go out of their way to stifle dissenting viewpoints fall into one of two camps: 1) Those who are actively attempting to deceive investors, and therefore find it threatening to have analysts around who may see through the ruse; or 2) Those who truly believe that their company will succeed, but are simply offended by the audacity of analysts who disagree. In my experience, it is worthwhile to short both groups; the first because the truth eventually emerges, and the second because managements who can not bear to hear dissent from analysts are also not open to new information from within their industry, and are likely to become road kill at the expense of more nimble competitors. Mr. Meyerhoff, who spent six years as the CFO of Form Factor, a company once as arrogant as First Solar, but in recent years humbled by industry transitions they failed to predict (or, at least, failed to adequately signal to investors), should understand this as well as anyone.
Of course, arrogance and intransigence work both ways. I have also seen analysts who become so wedded to a point of view (positive or negative) that they are physically unable to listen to information which contradicts their beliefs. I believe the term for this is “cognitive dissonance.” I hope I never fall into this category. That is exactly the reason I planned to attend your event: to hear management’s point of view and see whether there was anything in it which required me to rethink my position. Nothing that I heard on your webcast or read in the transcript had that effect.
But I remain open, and to that end I issue the following invitation: If there is anything that you are aware of that I have written or said which you believe to be false or misleading, please tell me what that is. I will, promptly, and without editing, include your perspective in written materials which I periodically send to the same group of industry colleagues who received my earlier views. This should, presumably, undo any harm you feel I’ve caused your firm by disseminating information which you believe to be inaccurate.
I believe my offer is more than fair, and I look forward to your response. You may forward the $9.00 to the address below.
Andrew Kaplan – Harvest Capital Strategies