January 14, 2005
Subject: File Number S7-38-04
To whom it may concern:
I am disappointed to learn that Internet netroadshows are likely to be eliminated by proposed new regulations. Please consider the following:
1)I believe the proposed regulation would put me at a disadvantage versus New York City investors (where the IPO lunch presentations are held). Although we are often able to get so-called 1-on-1 management meetings during the course of the IPO, we are wasting the issuing company's time (as well as ours) if we take the meeting without proper diligence ahead of the acceptance of the meeting. This is not the case when we attend the lunch presentation. The netroadshow presentation is essential to screen such (management) meeting opportunities. We own some 125 companies in our portfolio, each of which requires regular monitoring. On a given day, there may be news events and/or stock action requiring focus on some 10-20 percent of our portfolio companies. Meanwhile, we are typically working on another 5-10 or so new investment ideas (already public traded). IPOs present work on another list of companies (how many depends upon the strength and quality of the IPO calendar). It would be much more difficult to monitor them without the IPO netroadshow presentation. The prospectus is not presented in a user-friendly format (like the netroadshow). Another benefit is that the netroadshow slides can be examined with a proper time to reflect on their import (versus the lunch or management presentation). Most importantly, one cannot get a sense of the strength of management from the prospectus. With the netroadshow presentation, one can hear the voice of management as well as get a physical impression (managements are usually pictured on the slides). All of which is better for the system, because it facilitates informed decision making.
2)The Internet roadshow is an essential part of our research in making an informed investment decision. Given the workload noted above, when an IPO is brought to our attention (either by the underwriter or our review of the filing calendar), our immediate mode of operation is to "watch the net roadshow" and then determine whether to seek a 1-on-1 meeting with management or to attend the lunch. IPOs present a very narrow (time) window to complete our proper due diligence. After the deal is priced, the opportunity has passed. Purchases then must encounter more challenging liquidity conditions. In some instances, I have watched the roadshow 4 or 5 times before meeting with management, so that I may fine-tune the issues and associated questions.
3) If I go to a New York IPO lunch, I have to allot 3 hours (two hours of back and forth transportation and one + hour for the presentation).
4) The Internet Netroadshow is a technological breakthrough of meaningful proportions. I often marvel at how incredible they are ("like being there"). Nevertheless, I always want to supplement it by seeing management "in the flesh and blood". My subsequent management meetings are immeasurably better following the Internet Netroadshow.
It seems to me that the literal definition (the live presentation is not a writing, but when it gets delivered via the Internet it becomes one) will create a bad result. Netroadshow presentations are a meaningful technological advance. They save much time and help me make better informed investment decisions. I hope that they will continue to be available (to all investors if possible).
Thank you for your consideration.
F. Thomas O'Halloran
Lord, Abbett & Co. LLC