Bloomberg, October 4, 2021 commentary of Matt Levine: "Body language" [Continuing questions about private investor meetings with corporate managers]

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Continuing questions about private investor meetings with corporate managers


Source: Bloomberg, October 4, 2021 commentary


Money Stuff

Matt Levine is a Bloomberg Opinion columnist covering finance. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz, and a clerk for the U.S. Court of Appeals for the 3rd Circuit.


By Matt Levine

March‎ ‎4‎, ‎2020‎ ‎12‎:‎38‎ ‎PM

♦ ♦ ♦

Body language


One topic in finance that fascinates me is “body language.” Here is the problem:

1.     Big institutional investors often meet one-on-one with the executives of the public companies whose shares they own.

2.     These meetings appear to be desirable and informative, to the point that investors will pay banks for setting them up, and investors seem to make market-beating trades after these meetings.

3.     However, it is illegal for companies to give the investors “material nonpublic information” in these meetings.

4.     So what do they talk about?

5.     One theory is that the company tells investors information that is found in its public filings, and they chat about the weather and stuff, but the investors observe the executives’ “body language” during these meetings and use it to inform their investing decisions.

6.     Like, the executives say “as we said in our earnings release, we had 14% gross margins this quarter,” and that is in fact in the earnings release so it’s not news. But if they say it confidently in a power pose the investors buy more, and if they say it nervously while looking to the side the investors sell everything. Body language.

7.     One assumes (why?) that this “body language” is not itself material nonpublic information, so there is no legal problem with the company giving the investors access to it.

I don’t want to discount this theory entirely; I wrote once about a big investor that dumped all its stock of a public company because its chairman was too tan, which makes sense and was in fact a good call. (The company went bankrupt.) Still I do wonder about it sometimes. I assume “body language” is often a polite way to say “well sure they say a few things that aren’t in the public filings, but not important things.” It is easier to draw a bright line of “telling us earnings in advance is bad, but seeing body language is fine” than it is to say “telling us earnings in advance is bad, but helping us with some technical questions about how we should think about drivers of margin in our earnings model is fine.” And no one’s in the meeting with you, so for all anyone knows it's just body language.

Anyway here's a story about “Why Wall Street bankers are hitting the road again” that contains this amazing claim about body language:

During in-person meetings, Knee, who previously worked at Morgan Stanley and Goldman Sachs, pays attention to body language and looks out for subtle clues.

When he asks tough questions about sensitive subjects, including compensation and sales targets, he is interested in the answers, of course, but he also wants to see how an executive reacts to the interrogation.

"You can do that on Zoom," Knee says. "But it's very hard to see the sweat dripping down their forehead."

I have to say I went to a lot of in-person meetings as an investment banker and at no point, ever, did I ask the client a question and see the sweat dripping down their forehead? What? “And I see revenue is up 4% quarter-on-quarter is that right?” “Umm, umm, umm [looks around nervously] umm, umm, umm [breaks out in sweat] umm, umm, umm [tugs nervously at shirt collar] umm, umm, umm yes, yes our revenue is doing great, up 4% quarter-on-quarter, yes it sure is, nothing wrong with that, no siree, look over there a bird!” 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Matt Levine at

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