Now This is Scary !

A special Small Business section in the NYT described the process of generating investor interest for companies that go public. The challenge described in the article is to generate awareness from potential investors for companies To get the story out, you need help from firms specializing in investor relations; you also need research and analysis.
The role of the investor relations firm is to foster media interest in your company, get you ready for prime time and introduce you to investors. The firm will write news releases, create a press kit, focus your Web site and organize presentations.
Properly marketed, “boring companies with good numbers are not boring companies,” said Richard L. Stern, of Stern & Company, an investor relations company in New York.
Now here’s the really scary part…would you want this manger running your mutual fund:
Getting investors interested in your stock is literally a year-in, year-out process of talking to them. It’s not very likely that an analyst or portfolio manager will dash out of the room after your presentation and put in a big buy order — although that did happen to Brad Thompson, the chief executive of Oncolytics Biotech, a Canadian company that uses viruses to develop treatments for cancer.

Mr. Thompson was in the middle of an initial presentation to a portfolio manager when, he recalled, the manager said, “Stop.” Then he clicked a few keys on his laptop, looked up and said, “O.K., keep talking.” He had just put in a million-share order. “I said to myself, ‘That will never happen again,’ ” he recalled.
Once is scary enough imo, particularly since this type of stock small growth has consistently performed more poorly than any other sector of the stock market. Over the past 10 years here are the numbers
Annual Return Standard Deviation
Russell Total Stock Market Index 8.26% 15.08
Russell Small Cap Growth Index 4.81% 23.28

In other words the stocks of small “growth” (high price to earnings ratio) stocks gave investors roughly half the return with 50% more risk than the overall market. But these are precisely the type of stocks individual investors (and it seems many portfolio managers) gravitate towards. And the company is a classic case; a biotech company developing a cancer treatment. Investors buy the stock in the hope that it will be the “next amgen”, but history shows it is far more likely to fade into the sunset.