Client C is a real estate investment trust. Its stock was seriously undervalued, even though the company was doing very well and had an outstanding management. When we reviewed its previous annual reports, we felt the information provided did not communicate the essential nature or inherent value of a real estate investment trust or the predictability of its dividend. This we felt was the prime reason why investors kept its market value low relative to its current performance and future potential.

Solution: We revised the client’s message to investors. We went back to the basics. We explained how a trust operates, why this particular trust was superior to others, and why this client’s dividend was especially solid. We also included an “investment merits” section that highlighted the strengths of the company. In short, by providing a full, comprehensive analysis of the company, we provided prospective investors with a “high ownership comfort level” that found a wider investor audience. In a two-year period the stock advanced from the low twenties to the mid-forties.

Moral of the story: When an outstanding company is undervalued by investors, it’s almost certain that the investment message in the annual report lacks the basic information that awakens investors to the real value of the company.