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Letting Dividends Do Their Work

Annual Meetings

Kathy Courtney

Have you ever thought about attending the annual meetings of companies whose stocks you own? You should, especially if you own any small caps.

These meetings really give you a feel for a company and whether you think it can succeed. For one, you can observe the optimism (or pessimism) in the attitude of the officers -- believe me, it's apparent. And you can have a chance to shake hands with the officers of a company and ask them questions directly. Just like an insider.

I-Flow Initiation The first annual meeting I ever attended was I-Flow Corp.'s (Nasdaq: IFLOW). The company, which makes all kinds of infusion devises for pain management for patients to use at home or in the hospital, is close to where I live in Southern California. Since it's a small cap, only a handful of people attended, and several of those were company employees (I didn't know that at the time).

I received many handouts describing the company (a separate sheet for each product -- a lot of very interesting detailed information you don't receive in your annual reports). Plus, I was able to meet the CEO and several other officers and discuss their products with them. Since there was a small group of shareholders in attendance, they took us all on a tour of the plant that taught me a lot about I-Flow's organization and how they process orders, manufacture the devices, maintain cleanliness in packaging, etc. And I partook of some delicious breakfast rolls, juice, fruit and coffee!

The meeting began about 15 minutes late (we waited until the last group had returned from their tour) with the CEO at the helm. He spoke for about 20 minutes, introducing company officers who were sitting in the audience and giving us a slide presentation. After the meeting, we went to the display table and viewed the various infusion devices, while talking with company representatives. I learned a lot about these devices at that meeting. The entire affair seemed to be rather efolksy in manner (I had always thought annual meetings were very Robert's-Rules-of-Order formal).

Bio-Source Bonanza My next annual meeting was Bio-Source International (Nasdaq: BIOI), a small bio-tech company located in Camarillo, California, near Los Angeles. Bio-Source develops, manufactures, markets and distributes immunological reagents, test kits and oligonucleotides, which are used in biomedical research.

The annual meeting was held at their local country club -- very posh! We were offered a very appetizing breakfast display -- again, fruit, rolls, juice and coffee -- this time served in silver urns and on silver platters. The meeting seemed somewhat similar to the I-Flow meeting: Shareholders received various sheets on all of their reagents to study and were able to meet the officers and listen to them respond to audience questions.

Vertel Vortex That same year, I also attended the annual meeting for Vertel Corp. (Nasdaq: VRTL) in Woodland Hills, California, near Los Angeles, at the local Hilton Hotel. Vertel provides mediation software for telecommunications networks. Its new mediation software, e*ORB, continues to be adopted by top telecommunications, e-business and manufacturing companies.

This time, in addition to a wonderful breakfast display, we also received large note pads, handsome pens and rubber balls with the world printed on them -- quite nifty. I was particularly anxious to attend this meeting as I manage the Vertel Message Board here on and wanted more insight into the company.

Vertel had a price surge -- from under $2 to the $50 range last year (quite exciting!) -- but the stock is back down under $2 a share again. I attended their meeting again this May so I could see what the future holds. Whereas last year's meeting was quite upbeat, I expected some skepticism and hard questions from shareholders this year.

Vertel gave a very informative presentation on their company, followed by a Q & A session. They appeared to be very candid and open about the business and attempted to calm our fears about the company's future. I went away feeling we might just make it -- and, in fact, might show a profit by early next year.

Major League Meetings At large meetings things can be a bit more interesting. For instance, this past April at the Bank of America (NYSE: BAC) annual meeting, Hugh McColl announced his resignation, handing the reins to President and Chief Operating Officer Kenneth Lewis at the meeting. McColl said he was leaving BAC due to a 25% drop in its stock during the past two years, at a time when bad loans are rising as the economy slows and customers struggle to repay debt. A shocker to all in attendance, I am sure.

At the General Electric (NYSE: GE) meeting, also in April, there was some lively activity. Shareholders voted down two proposals -- one which required the company to disclose how much it had spent on advertising opposing the dredging of the Hudson river. Wow, that was a bombshell! Jack Welsh admitted to spending between $10-$15 million, as well as to opposing the shareowner proposal that required this disclosure. It was Welsh's last appearance as CEO and he tried to avoid the subject of his departure, although several shareholders talked about it in their comments.

Abbott Labs (NYSE: ABT) has spent the past year trying to drop its trouble-prone image, but shareholders at the company's annual meeting in April continued to ask hard questions. A former employee, a researcher I believe, asked for the resignation of the company's CEO and members of its board of directors over an alleged price-fixing scheme at TAP Pharmaceuticals Inc. (its 50/50 joint venture with Japan's Takeda Chemical Industries Ltd.). You usually don't get all this action at a small cap meeting with only a handful of shareholders in attendance.

Berkshire Hathaway's (NYSE: BRK/A) annual meeting lasts for an entire weekend! About 12,000 people traveled to Omaha for the gathering this year which was held at the Omaha Civic Auditorium. When you entered, you felt you had reached the Mall of America. All of the companies Warren Buffett owns display their products, which are for sale, of course.

Each Berkshire conference opens with a homespun movie in which Buffett pokes fun at himself. In this year's film, Buffett appeared as Tiger Woods' caddy, drawing huge laughs from the audience. Buffett spends only about 10 minutes on the business meeting and then uses the rest of the time talking about stocks and investing. I have friends who own Class B shares and they attend each year. They say they get a wonderful learning experience from the "master" himself (and they also love all the wonderful food served).

Web Watch Something new this year, I watched two company's annual meetings over the Web: PepsiCo (NYSE: PEP) and Qwest Communications (NYSE: Q) . I think the new disclosure act has prompted companies to make as much company information as possible available easily to their shareholders.

The Bottom Line I have been very lighthearted as I talk about these meetings, but I do feel attending them can be useful for investors. Sometimes they reveal unexpected news, believe me!

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