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There isn’t a standard length of time for unofficial quiet periods. These quarterly periods end, of course, with the earnings conference call and/or press release, but it’s up to each company to determine when they begin. Constructing the optimal quiet period will vary, depending on how quickly earnings are determined and how experienced executives are with analyst and investor interactions.
A quiet period is an interval in time when corporate insiders need to limit their interaction with the public due to the insiders’ knowledge of material information. Typically, this applies to a period when management has knowledge regarding company news that has not been announced to the public. This can be broken down further into two general categories:
IPOs and Financings. These quiet periods were established and are regulated by the SEC to prohibit analysts who are associated with the deal ( i.e. who work for the investment bankers on the deal) from writing research reports that could influence the stock price during a defined period of time.
Quarterly Earnings and Material News. The period between the end of a financial quarter and the day that quarterly results are released to the public, as well as a period before material news about the company is going to be disclosed.
http://gilmartinir.com/things-to-consider-during-blackout-and-quiet-periods/
Our Blog: The Podium
Confronting the Quarterly Quiet Period Dilemma
July 17, 2012 smerrilldev Comment
By Jim Buckley
One of the investor relations issues that companies often struggle with is the “quiet period.” Here I’m not talking about the SEC mandated quiet period related to IPOs, other public offerings or around the release of lock-up agreements. Those all have defined legal parameters and lines drawn around what companies can and can’t do. I’m referring to the quarterly quiet period – where individual companies determine if, when and how they want to stop talking to the investment community as they approach the end of the quarter.
The quarterly quiet period is one of those gray areas that investor relations is famous for, and there is certainly no one-size-fits-all approach for companies. The fundamental principle behind the quarterly quiet period (or QQP) is straightforward. At some point around quarter end, management has knowledge of the company’s quarterly performance. So investors start calling in the last two weeks of every quarter and asking “How are things going?” They want to get a read on upcoming results through tone and demeanor. As a result, over time, companies began to institute a quiet period with the Street to avoid taking these calls. Makes sense, right? But how does each company handle its QQP? That’s where things start to get a little fuzzy.
Companies have adopted different QQP approaches because there are no legal mandates. First off, when does it start? Some companies – particularly in the technology space – opted for QQPs to commence two weeks before the quarter ends. The thinking behind this is that they tend to have a hockey stick revenue model where sales are heavily weighted to the end of quarter. Some will say it starts in the last month of the quarter and some at quarter end when their books are finally closed. Others have no clear delineations on timing – it really depends on when management has a good sense of the quarter. For every company that has a QQP, it runs until financial results are finally announced. Practically speaking though, that means some companies may technically be in a quiet period as much as seven weeks or more every quarter, which is cumbersome and can hinder open communications with the Street. That means more than half of the year they can’t talk to investors!
The next big question is what does a QQP mean to an individual company? Again, it’s a potpourri of answers. For some companies, it means full radio silence – no conferences, meetings or investor phone calls during that period. The problem with this communications shutdown approach – particularly with small, underfollowed companies – is that it doesn’t curry you any favor with the Street and clearly inhibits your visibility.
That is ultimately why many companies adopt a more flexible approach to the QQP. Some will agree to go to conferences, but not attend one-on-one meetings. Some companies will pre-release quarterly results or confirm/update guidance in conjunction with their conference participation. This is a sensible approach that we often recommend. Other companies will restrict certain members of management during the QQP – particularly those that cannot keep a poker face. Other companies will lay down ground rules at the start of any one-on-ones or phone calls during the QQP that the discussion of the quarter is off limits and they will not address anything related to it.
However, that is the challenge of even talking during the QQP. Members of Wall Street don’t necessarily need to ask you about the quarter to quickly decipher how it went, particularly if they are in the same room as you. As my colleague David Calusdian wrote about in a previous Podium post, the Street is being trained by former CIA and FBI agents to read body language and detect discomfort/insecurity even when no answer is given. It’s only natural to be less enthusiastic about your company when you’re preparing to announce a lousy or even a lukewarm quarter. Conversely, it’s hard to not to be brimming with confidence when you have a homerun quarter waiting in the wings to be announced.
Wall Street knows this. Why do you think so many of the sell-side firms insist on scheduling their conferences during a time when many companies are in their QQP? They know information will be more current and buy-side interest for attending those conferences will be higher. Along the same lines, why else would some of your shareholders or prospective investors just happen to be coming to your city right around or just after quarter end? They promise upfront not to even ask about the quarter, because they know they don’t need to. Those last minute “love to drop by” visits just happen to cluster around quarter end. Coincidence? I think not.
So what’s a company to do? There’s no simple answer. Ultimately, you have to strike a balance between avoiding selective disclosure and maintaining your Street relationships. Whatever you decide – radio silence, some hybrid form of that or no official QQP at all – it’s important to be consistent. Don’t say you have a formal QQP policy one quarter and then appear at a conference or take calls the next. Wall Street takes note of these inconsistencies. Also, you shouldn’t turn down one investor because “we’re in our quiet period” and then accept a meeting with a top five holder because you want to keep them happy. If you are consistent, over time your analysts and investors will know what to expect rather than looking for erratic or inconsistent behavior, which provides clues about your quarterly performance. Consistency helps you stay in compliance with securities regulations and equally as important, can lower your stress level around quarterly time. What CFO doesn’t want that?
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The Westwicke Blog is designed to deliver information and insights into the ever-changing world of investor relations and the capital markets, with a specific focus on the healthcare industry.
COMMONLY ASKED QUESTIONS ABOUT QUIET PERIODS
POSTED ON JUNE 6TH, 2014. POSTED BY TOM MCDONALD
Public healthcare companies often question the best course of action during quiet periods — those stretches of time during which they should limit their interaction with Wall Street due to their knowledge of material and timely information that has not yet been disclosed. Specifically, management teams struggle to figure out what the quiet period means for their investor relations (IR). Should they bring to a halt all communications with the investment community or have limited interaction? Should they answer only fact-based (or historical) questions or avoid inquiries altogether?
While the formal quiet period regulated by the Securities and Exchange Commission (SEC) comes with clear guidelines and regulations, informal quiet periods are far less defined, and variation exists in how much (or little) a company communicates with investors and analysts.
How can companies determine the right approach? Here, I give you some basic information about quiet periods — and share strategies to help you figure out the best quiet period policy for your organization.
What is a quiet period?
Essentially, there are two kinds of quiet periods for publicly traded companies. The first surrounds a company’s initial public offering (IPO) and is heavily regulated by the SEC, while the second is more loosely defined, and refers to the period of time in which a company limits its interaction with investors and analysts immediately preceding or following the quarter-end, but before results are actually released.
Why do quiet periods exist?
The purpose of a quiet period is for a public company to avoid making any comments about information that could cause investors to change their position on the company’s stock.
IPO quiet periods were created by the SEC to prohibit analysts who are lead and co-lead underwriters from issuing positive research reports that might influence security prices during the first few weeks of a new IPO. In addition, quiet periods exist to protect companies from inadvertently violating Regulation Fair Disclosure (Reg FD) during the sensitive time in which they are aware of their quarterly financial results (or any material, non-public information), but have not yet publicly communicated this information.
When is the unofficial, quarterly quiet period, and how long does it last?
There isn’t a standard length of time for unofficial quiet periods. These quarterly periods end, of course, with the earnings conference call and/or press release, but it’s up to each company to determine when they begin. Constructing the optimal quiet period will vary, depending on how quickly earnings are determined and how experienced executives are with analyst and investor interactions.
How do companies maintain shareholder communications during a quiet period?
The communications policy a company adopts helps frame how they communicate with the investment community and Wall Street. Some companies may still wish to communicate by simply avoiding off-limit topics, such as quarterly results, and sticking with fact-based responses. Other companies may comment on topics that have already been publicly disclosed, and still others may elect a period of time in which they go radio-silent. It really depends on the company comfort level and view of its stakeholders within the company.
How can companies navigate investor calls, conference participation, and tradeshows around quiet periods?
Depending on the communications policy a company adopts, the level of communication at conferences and tradeshows will range widely. Some companies choose to eliminate participation in conferences, meetings, or investor phone calls during that period, while others agree to go to conferences but not attend one-on-one meetings – with the caveat that all communications are webcast to be Reg FD compliant. In other cases, some companies may pre-release quarterly results or confirm/update guidance with a press release in parallel with their conference participation.
Regardless of the communications plan a company takes, the most important part is for a company to outline its policy, adhere to it, and be consistent.
What is standard practice, and what is recommended?
As we’ve discussed, company disclosure policies in a quiet period depend on a number of factors. What practices are the most common? Typically, a company will opt to do one of the following:
Provide no formal or informal communications at all
Provide limited communication and interaction with Wall Street by primarily:
Answering only fact-based inquiries
Imparting information only on overall long-term business and market trends
Make an announcement if it expects results to differ materially from earlier forecasts, and answer questions about information already made public
In the interest of fairness and to mitigate the risk of inadvertent disclosures of material information, the policy should reflect a company’s comfort level with the amount of disclosure it wants to provide Wall Street and the investment community. It is important to strike a balance. For example, going completely silent may not be in the best interest of small-cap companies that are thinly covered, or even for some larger companies.
If a company chooses to take investor and analyst calls during their quiet period, it needs to be clear and consistent in communicating the topics that are on and off limits. It is also important that all designated spokespersons adopt the policy and remain consistent quarter-over-quarter.
As you develop your quiet period policy, remember that there is no one right way to approach an unofficial quiet period. Ask yourself what’s in the best interest of your company, and then plan accordingly. Need help strategizing the right approach? Westwicke can help. Download our Investor Relations Guide to find out about our range of services and the unique approach we take to healthcare IR.
https://westwickepartners.com/2014/06/commonly-asked-questions-about-quiet-periods/
How do you know? There are reasons for a quite period and unless you know what's going on behind the scenes I don't see how you could know. Also from what I've read any public release or conference call officially ends the quite period. Not trying to be argumentative would really like to know.
Don't be so hard on yourself
They can't be making to much. 80 percent of the shares sold at .53 or lower.
Majority of the shares were loaded between .50 and .52. The majority of selling today has been .49 to .53.
I could see that but wasn't the share structure the same? Also if no merger where did all the FUYA shares come from.
IB show 30000 available.
People need to pull their shares from the ask. Will be a lot easier getting their money back splitting from .0002 than .0001. Post split would be 8 instead of 4.
I wonder if they will or can raise the outstanding shares before the split takes effect. The company has to pay taxes on the merger unless they own 80 percent of the outstanding shares. Not sure if that plays a part here.
Well the last one I was in they upped the os to 100b giving themselves 85b. After the split the os was 100m and the price went from .0001 to .10. The price climbed to .80 then over time fell back to around .30. A lot of different things can happen. The key is the companies brought in.
What rumor is that
Is that what you've been doing. Thinking about getting in at the right price. I assumed you are flipping giving the amount of time you put into this.
Agree
Bought at 3.75 and 3.95
This will bounce hard again. Before the end of the week.
Slow as molasses.
I see. I'll load again at the right opportunity but I don't use fear to get there. Just not that guy. GL
Why do you care.
The ACA was Obama's also. Trump had no problem trying to reverse that and every other single thing he did. So why not this. Why is he continuing the fight. He has switiched the governments position in plenty of court cases the Obama administration was fighting. Not this one though. Just watching F&F you never know Obama left.
Can they increase the as and the os before the split.
I was in aig at that time and the only thing good about that deal was the warrants given to shareholders. They didn't come close to making up the difference. I was in a little high at 2.20 so really the warrants was the only money made.
Not sure if it's anything or been mentioned but Pashars bio on Bloomberg has him as CEO of UAN Power but otc shows someone else. They filed an attorney letter and went dark on 5th. May be a coincidence.
Should be a good day.
I agree. The 40000 seems excessive unless they want to uplist. Fact is the only way to avoid paying taxes on the merger was to RS this. Not as much as they are but still. I posted this 2 days a go.
Back in at 4.43
You can still make money here. The exact same kind of play happened last year at this time. CRTC had 5b os and merged with a recycling company. To avoid paying taxes on the merger they had to own at least 80 percent of the os. They raised the os to 100b, gave themselves 85b and then RS 10000 to 1. The share price went from .0001 to .10. The share price within a month was at .80. Not a guarantee but still have the opportunity to make money. It will depend on what businesses they bring in.
He does videos on stocks that have had big moves. Why would he promote his videos on stocks with little interest. I'm sure it doesn't help when someone convinces others it is going to fall when he shows up.
Does anyone know how they got to 750m shares. Last merger I was in to not pay taxes per section 351 the aquirer had to own 80 percent of stock. To get there they raised the os to 100b gave themselves 85b and then RS 1-1000. Still made 600 percent. Could this be the same kind of deal?
In at 3.98
How good is the moalis plan after giving up all secondary business and then what 75 percent of the remaining business to TBTFBs.
Someone is getting the hell out of Dodge. These are big changes and not simple recap and release. I'm not ready to think this is good news. Giving business away. What happens to price after splitting up to go along with dilution.
Lot of selling going on for it to mean much.
It's definitely a competition between a few. They keep undercutting each other.
IMO it is someone with a lot of shares taking what the volume gives them. There aren't going to drive the price down to much but are working support and resistance.
NITE endless at 5s.