Another year, another annual stockholders’ meeting for MicroVision (MVIS). I’m somewhat speechless; but not entirely so, which shouldn’t be a surprise to people who know that I speak through writing. (In the real world I prefer to listen unless I’m in the role of public speaker, but I digress.) Ideally, annual stockholders’ meetings are for the benefit of the stockholders, an opportunity for them to hear from the people they’ve hired (the board) about how well the people they’ve hired (the managers) are managing the company and the people they hired (the employees.) In some companies it is that. In some, like MicroVision, either by choice or necessity the discussion is an exercise is ambiguity and obfuscation. You know it can be radically improved when the independent shareholders are a better news source than the official conduits. I came away wondering if these well-paid and supposedly learned people haven’t learned from the Greeks, the French, the Russians, or late night talk show hosts.
This blog is more about the personal side of personal finance, what it’s like to be an independent shareholder. Don’t expect pom-poms and cheers, but don’t expect me to say stay away. Stock ownership remains an avenue for passive income or at least semi-passive asset growth in the US. If you’ve visited this blog often enough you’re probably familiar with the old refrain; “Spend less than you make. Invest the rest.” Investing doesn’t have to be hard, but it benefits from a bit of work and critical judgment.
MicroVision has been a story stock for the twenty years I’ve known about it. They rarely state their case this way but to me, they have the potential to revolutionize displays. Remember CRTs? They were everywhere, and within a few years were booted out by flat LCD screens. LCDs also expanded the possibilities. Only Dick Tracy had a CRT in his wrist watch. The iPhone wasn’t really possible until LCDs (and Gorilla Glass, which has an anti-MVIS connection) became possible. Now, displays are so common that some appliances and vehicles don’t have buttons. MicroVision’s technology enables tiny projectors, which could be equally disruptive and expansive. But not yet, evidently.
It’s that ‘not yet’ part that inspired many of the questions at the meeting. Why not yet? Why not now? How long do we have to wait, or is there something fundamentally wrong which means never not when?
Startup companies rely heavily on their first customers. Companies with big ambitions get involved with big customers. Big customers don’t want little suppliers besmirching their brand. So, companies like MicroVision can be constrained by non-disclosure agreements (NDAs). No news doesn’t mean no news, it just means no news that they can relay. Unfortunately, no news can mean no news, as has frequently been the case for several years at MicroVision. Deals fall through. Technology isn’t available or costs too much. Stockholders hear far after the fact, if at all – while the stock reacted as if someone else already knew. Very frustrating.
The board and management control the information, which is a powerful position. It is also a well-paid position. Compensation packages annually worth hundreds of thousands of dollars are passed around as the company loses millions of dollars. Some of those people are making several times my net worth every year. Power and profit, a nice business model. MicroVision, as well as other small companies, can mint millionaires while shareholders watch portfolios shrink. That microcosm of forty people in a room becomes a mini-play displaying wealth and income inequality in a manner that is ingrained in our economic model.
The Greeks watched hubris demolish powerful reputations. The self-confidence of empowered managers may be a sign of marvelous news yet to be released, but it can also be mutually-reinforcing as board members nod at board members while giving each other applause and raises. One reason to show up at such meetings is to assess for oneself whether management is confident for a good reason, confident as a style, (or sadly as the SEC has proven, sometimes just conning.)
The French and the Russians both saw regimes fail because one group of people saw themselves as apart from another set of people. Us versus Them is a common human characterization, but take it to an extreme and extreme things happen. Unfortunately, small company regime change rarely happens from outside the boardroom. Fortunately, independent investors can judge those characters and decide how best to invest.
The late night talk show hosts are teaching millions of people the value and folly of the recorded and repeated word. Say something this year, say something else this year, and others can compare consistency. That’s the value of attending every year and taking notes. Recordings would be better, but they’re not allowed.
My notes from 2018 MVIS ASM; “Before the Q&A period, the COB interjected and emphasized that they see the company passing from possibility to probability, hopefully with profitability in 2019.”) When asked about it this year, the board and management said the ‘discussion’ about profitability in 2019 was more along ‘goals’, ‘objectives’, etc.; not intended to be guidance. Legally, probably true. Realistically, is such a statement and distinction a reflection of desirable communication skills? You get to decide.
I’ve attend most if not all of the MicroVision annual meetings since 2000. Someone walking in now for the first time gets a different impression than someone who has heard the same or similar story for about two decades. I’m glad I showed up that first time, and kept coming back. I just wish MicroVision’s situation was better. If you want examples of investments where the stories were successes, go buy my book; Dream. Invest. Live. Whichever way it goes, MicroVision will be in the sequel (assuming I finish writing it.)
I built my portfolio with many local stocks precisely so I could see the company and the people in person. Sadly, MVIS is my last remaining local stock. SEC filings are official. Company press releases are too. But only a small fraction of communication is text or numbers, or even hearing them instead of just reading them. Humans communicate much more through body language. At a meeting like an ASM, that body language is amplified by everyone in the room. I attend to watch the presenter and the presentation, but I sit in the back to watch the body language of the presenter and the reaction of the crowd. It doesn’t cost much, isn’t captured in any report or analysis, and yet is valuable.
Despite my concerns about MicroVision’s communication style, I continue to hold the stock and may even buy more (after a few more house sales). The technology, industry, market, and potential impress me. I don’t expect perfection, and maybe the only thing I have to do is trust that ambiguity is by necessity, and that this year truly is different. As to us versus them, well, that would require individual revelations, a bit of compassion, and hopefully not revolutions.