Getting investors to read company literature no joking matter for the upstart — and irreverent — asset management company
Leave it to a company whose corporate logo is a court jester to find novel ways of ensuring that their shareholders read the annual report.
Frustrated with the way investors are known to disregard important financial literature, Motley Fool Asset Management LLC has started giving away baseball caps and a chance for lunch with the portfolio manager just for reading the annual report.
“We set a goal to do something different, because we want shareholders to pick up the annual report and actually read it,” said Peter Jacobstein, president of 3-year-old asset management unit of The Motley Fool Holdings Inc.
Based on the fact there are about 90 million U.S. mutual fund investors, which average four funds per household, Mr. Jacobstein estimates that the fund industry is sending out nearly 400 million annual reports every year.
“We know most of those reports are largely ignored, which we think is a real shame,” he said. “People turn their money over to us to manage, and we want them to know what we've done with it.”
Thus, in addition to making the annual report readable and even humorous at times, Motley Fool has tapped into one of the most basis human instincts, proving that people will respond to free stuff.
“We're elated with the response we've gotten so far,” Mr. Jacobstein said.
Motley Fool, which has three mutual funds with a combined $270 million under management, received nearly 1,000 requests for hats and a chance for the free lunch during the first two weeks of January to the 15,000 reports mailed out at the end of the year.
“That response was about three times what we expected,” Mr. Jacobstein said.
He admits there is no way of ensuring that shareholders are reading the entire 68-page report, but directions to enter the free-lunch contest with Bill Mann are buried within the portfolio manager's letter.
“We purposely moved the directions inside the report to the PM's letter, and if somebody got that far, I'm delighted,” Mr. Jacobstein said.
The report's blatant groveling for readership is anything but subtle.
The first page boldly lists “the top 10 reasons to read this report.”
In addition to the baseball cap and chance for lunch with Mr. Mann, the list promises such gems as the “unusual use of the word ‘autodidact,'” and “a completely gratuitous reference to J. Martin Troost's ‘The Sex Lives of Cannibals.'”
“Putting this report together took a lot of discussions with our auditors because they hadn't seen anything like it before,” Mr. Jacobstein said.
The lunch date contest will remain open through the end of January. And according to Mr. Jacobstein, the number of analysts joining Mr. Mann on the visit could expand, depending on where the lucky shareholder is based.
“If it turns out the winning shareholder lives in Hawaii, you should be very suspicious of our selection process,” Mr. Jacobstein said.
