The small investor, often, is the big sucker in the stock market. In crises, and in the exaggerated booms and busts of the past decade, he is an early and big victim. A friendless soul in the convulsive world of stock markets, few give the little guy any attention, time or information.
Is there anywhere he can turn to in order to protect his investments?
Yes, there is. NOW.
DearCEO is an online forum with a difference. Unlike typical investor relations firms, its loyalty is to the investor, not the companies. It lets investors in any of the thousands of ASX-listed companies pose questions to CEOs, and then forwards them to the respective companies for their responses.
Founder Philip Tan, a surgical trainee and serial entrepreneur, believes DearCEO is the future of investor relations.
“Clinical governance is very similar to corporate governance – both need to be open feedback loops between participants that are aimed at improving the system,” said Tan, whose Melbourne startup claims growing resonance since the Euro Zone crisis intensified.
“It decentralises how investors seek and receive information, and personalises mass communication and corporate governance. There is no doubt that this is the gold standard and future of investor relations.”
Got the right question, will get right answer
Another reason why DearCEO is necessary, says Tan, is the need to ask the right question to get the right answer.
“I was inspired to launch DearCEO because as a proactive retail investor (often with my negligible $2-3k parcel of shares in a company), CEOs would ring back personally to answer my queries — and the information received was often not clearly communicated in the announcements,” he says. “I realised, to get the right information you must first ask the right question.”
DearCEO has 9,930 members who have posed scores of questions and comments on 9,491 companies listed on the Australian Stock Exchange.
After filtering the questions, and eliminating duplicates, the company identified 195 unique questions it then sent out to CEOs for responses.
Tan says more than 95% of the questions were answered, reflecting perhaps the “highest standards of corporate governance and participation as more than 95% of questions are answered. Companies ducked the rest citing sensitive issues or regulations.
“Most companies that promote the use of our site as an effective and time sensitive communication tool have been, and continue to be, prepared to take on questions in a candid manner as long as it does not breach the corporate disclosure regulations,” said Tan.
From an individual investor’s point of view, DearCEO provides a level of access to companies that he almost never gets at shareholders’ meetings or via other existing channels of communication. Currently, retail investors need to call in or email in what is at best a disorganised, inefficient and time-consuming method.
Also, Tan points out, it gives rise to a “he says, she says” on a variety of stock market forums and much of the information is subject to abuse and may even be illegal.
In contrast, DearCEO acts as a proxy for its members and provides a live repository of questions and answers between listed entities and investors, bringing authority and credibility to the entire process.
Even a professional share trader such as Mark Bolton, who uses DearCEO as a tool for research, says he “was impressed to receive a concise response from senior management at Campbell Brothers – I didn’t have to hunt for contact details to get in touch with them.”
Tan says that nearly every time the market declines, or scandals such as MF Global and Olympus spook investors, DearCEO witnesses a surge of investors signing up. It simply reaffirms our pre-launch thesis that the public are hungry for information to protect their investments, he said.
From the companies’ point of view, DearCEO is a great forum to manage investor sentiment and expectations. So much so, companies actually pay DearCEO for the service.
“For the first time, CEOs can now reach grassroot investors from their smart phones from airport lounges, taxis, and hotels,” said Tan, emphasising the value to listed companies.
Tan, who previously founded Medworks and UrologyonCall, claims DearCEO is unique in the Australian market. He now seeks to take this service to U.S. and U.K.