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Post by mnkdfann on Jan 7, 2020 15:07:13 GMT -5
Giving future guidance in an earnings call and then beating it IMO is not as important as beating analysts' expectations.
Sure, guidance given in an earnings call can help set those expectations.
But I guess you can also do that through private meetings on Wall Street.
The latter may be better if you are in a position where a positive guidance you can meet is hard to give. Or if you've been burned in the past, by giving guidance and failing to meet it.
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Post by awesomo on Jan 7, 2020 15:08:36 GMT -5
Keep citing that article from 3 people at McKinsey from 2006 as gospel...
And I already said it doesn't matter if you believe providing guidance does anything or not, but missing guidance IS NOT GOOD.
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Post by mango on Jan 7, 2020 15:16:07 GMT -5
Keep citing that article from 3 people at McKinsey from 2006 as gospel... And I already said it doesn't matter if you believe providing guidance does anything or not, but missing guidance IS NOT GOOD. You may well be correct it is not good to miss guidance, but it also is not bad to not practice guidance as well. McKinsey says there is NO evidence that guidance improves shareholder value. It’s not a matter of whether I believe it or not, that is a demonstrable fact, observational truth (according to McKinsey). Are you saying McKinsey has the facts wrong? If so, prove it. If not, be done with it!
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Post by ktim on Jan 7, 2020 15:55:08 GMT -5
Look, you guys complain endlessly about how Wall Street and the big bad shorts treat MannKind like crap, and we're just explaining why they do that. There is no transparency and there is no trust. Also, LOL at bringing up dividends into the discussion. Whether or not you want to believe guidance is useful or not... Missing guidance -> BAD Cutting guidance right after missing guidance -> BAD Missing loan covenants a few months after setting it -> BAD According to McKinsey, there is no evidence that guidance improves shareholder value. It may be bad to a short-term investor since they rely on news, announcements, and, of course guidance as well, but it has no meaningful impact on PPS, period. MannKind not practicing forward guidance has no meaningful impact, good or bad, on the PPS. Awesomo:Strong guidance has the biggest influence on share price because it signals strength going forward from the management team. Mike doesn't even give guidance, and you wonder why Wall Street "hates" us. McKinsey:Our analysis of the perceived benefits of issuing frequent earnings guidance found no evidence that it affects valuation multiples, improves shareholder returns, or reduces share price volatility. The only significant effect we observed is an increase in trading volumes when companies start issuing guidance—an effect that would interest short-term investors who trade on the news of such announcements but should be of little concern to most managers, except in companies with illiquid stocks. I of course invite you to provide evidence of the contrary, but my chips are on McKinsey’s expertise and not yours. 😉 McKinsey:" Our review of approximately 4,000 companies with revenues greater than $500 million..." Get back to us when MNKD has over $500 million in revenue. Then their study might be meaningful. Apples to oranges otherwise. MNKD very well could engage in hand waving and smoke and mirrors with no negative investor repercussions once (if ever) they are doing $500 million in revenue. Not to mention their "except in companies" statement. A company needing to do equity financing as large as MNKD has, by definition has share liquidity issues... how much the market can absorb without tanking the share price.
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Post by matt on Jan 7, 2020 15:56:29 GMT -5
Guidance is a game that will eventually bite a company in the butt, but analysts love the game all the same. The advantage of putting out guidance is that for most actively traded stocks, if management doesn't make a guesstimate then the analysts will make their own and in most cases the analysts know far less than the company and are more likely to get it wrong. The problem is that it really doesn't matter if the company puts out guidance or if the analysts make up their own forecast; the company will get penalized for missing the expectation that the market holds whether that expectation is reasonable and well-informed or not. Most analysts will simply repeat whatever management has communicated.
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Post by sportsrancho on Jan 7, 2020 16:12:03 GMT -5
Mango you can out argue me, out article me, and out google me all day long but I’m telling you it’s experience that tells you what moves a stock up and down:-)
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Post by helmut8056 on Jan 7, 2020 17:02:30 GMT -5
I've never heard it called that before.
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Post by mango on Jan 7, 2020 17:03:50 GMT -5
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Post by wgreystone on Jan 7, 2020 17:08:52 GMT -5
Not providing guidance means the management has no clue what the revenue would be like 3 months down the road. Guidance is what wall street relies on to evaluate those small companies.
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Post by mango on Jan 7, 2020 17:20:09 GMT -5
Not providing guidance means the management has no clue what the revenue would be like 3 months down the road. Guidance is what wall street relies on to evaluate those small companies. Guidance may benefit the short-term trader since it pertains to short-term results, but it doesn’t focus on long-term goals and meaningfully help long-term investors.
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Post by ktim on Jan 7, 2020 17:32:51 GMT -5
Again... get Warren Buffet to be interested in investing in MNKD and then I'd believe the advice he's given related to the companies he invests in might be applicable to MNKD. And of course Buffet has extraordinary access to executives at the companies he invests in. Heck, why would you want more open disclosure of things when you're one of a very few investors where the CEO would probably take your call in the middle of dinner on his personal cell phone, or have someone on the board representing you.
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Post by mytakeonit on Jan 7, 2020 18:18:45 GMT -5
Warren and I are buddies because we both have the same flip phone. He told me to buy all the MNKD shares that I can ... and some for my daughter ... because the launch is starting in January and it is going to the MOON !!!
But, that's mytakeonit (Did you also know that we used our sixth sense to determine this. And that's why it is going up by 6 cents every day.)
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Post by ktim on Jan 7, 2020 18:29:09 GMT -5
Warren and I are buddies because we both have the same flip phone. He told me to buy all the MNKD shares that I can ... and some for my daughter ... because the launch is starting in January and it is going to the MOON !!! But, that's mytakeonit (Did you also know that we used our sixth sense to determine this. And that's why it is going up by 6 cents every day.) I thought you read that stuff off the back wall where the k9 fortune telling laser is pointing. I've always thought that was such a much more humane way of fortune telling vs how they used to use animal entrails.
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Post by cedafuntennis on Jan 7, 2020 20:22:09 GMT -5
Did anyone claim that the company had to provide ONLY guidance? No. Guidance is important to the share price and it is plain common sense that lack of guidance directly implies no confidence in results. Yes, long term accomplishments are critical as well, in conjunction with guidance and in our case, a few other metrics such as doctors prescribing, insurance coverage, etc., etc.
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Post by prcgorman2 on Jan 7, 2020 22:42:22 GMT -5
This topic on guidance gets a lot of attention and not just on this board or at McKinsey. It’s apparently a somewhat religious-like debate. I’ve had courses in corporate finance and one of the professors I had was particularly persuasive that guidance is a damnable nuisance and not giving it or not having to give it was another reason for intentionally delisting or going private. On another thread ktim pointed to the fact that business managers (in that thread we were talking about insurance providers) have self-limited planning horizons which are or can be detrimental as compared to what may be possible with longer term outlooks. This literal short-sighted goal seeking quite literally impacts budgeting and business objectives that provide a worse return for the company and it’s shareholders. The “guidance” being bantered about here is unquestionably of the short-term variety. Ever tried to develop 3 year or 5 year budget/planning exercise for complex technical requirements? I have. Multiple times. For most of a decade. You get used to an interesting cadence. Your year 1 planning assumptions and estimates are never 100% accurate because you have to make educated guesses about arcane requirements with incomplete information. Year 2 is worse if you audit reality experienced versus planned. And this is not because people are stupid, lazy, or incompetent. It’s because it is impossible to completely model every possible contingency. Suppliers get in price wars, or merge, or go bankrupt. New feature or function requirements crop up, capabilities change, competitive actions require adaptation, statutory and/or regulatory changes, and general economic circumstances demand adjustment. Remember the “Dec 2018” economic situation in which Mannkind raised capital with a dilutive direct offering? 3 months later the decision looked horrible, but at the time, it looked understandable. My point is really good guidance is possible when things are a simple slam dunk which is rare at best. And, making changes in business plans to please folks with a very short-term outlook is not a good reliable strategy. You want guidance? Go to a counselor is my opinion.
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