Disclaimer: The following are our thoughts and observations about certain securities market activities. This information is intended to provide our viewpoint and is not intended as advise, guidance, or to provide any direction.

Most public companies have some form of an investor relations program to assist investors by providing with press releases, earnings releases, and company guidance. The larger and more sophisticated investor relations programs also attempt to influence the market valuation process by finding investors whose investment profiles complement managements strategic and operational planning.

Unfortunately, with the growing market sophistication in automated trading programs, hedge funds, and derivative products, it has become increasingly more difficult to determine what is actually happening in the public markets. One of the main frustrations of management and the investor relations professional is not fully understanding what is causing a companies stock to react as it does. The old efficient market theory states that if a company is successful in implementing their business plan the market will then recognize this and the stock price and trading pattern will perform accordingly. This has become increasingly distorted. Although it is certain that a public company will ultimately rise or fall based on its ability and performance it is no longer the only valuation dynamic.

First, one must understand that today's market is dominated by institutions whose main objective is to make a profit every quarter. The old buy and hold strategy has been replaced by the buy, hedge, or hypothecate, and then aggressively trade around their position paradigm. The difference between the amounts of shares traded against those shares actually delivered has been expanding.

The sea change we have witnessed in the valuation and trading dynamic over the last few years is significant and holds more unknown long-term implications than anything we have observed in our 37 years in the market. Many of the largest and best-known funds are now using market created derivative products to hedge their positions in the marketplace. Institutions that were once considered long-term value investors are now pursuing far more aggressive investment practices. The effect this has had on stocks, especially small and micro cap stocks, is often times damaging. Institutional market composition, forward sales agreements, hedge positions, and other derivative products are having an increasingly large influence on the market valuation process. Trying to use a twentieth century mindset on these modern-day problems is of little value and guaranteed to be costly and extremely inefficient.

Many public companies in an attempt to solve the problems created by this new market paradigm retain market intelligence firms to provide some insight into who is doing what. Jackson Hole Advisors observation is that market intelligence in and of itself is only of marginal value unless it is translated into useable form. Assuming the intelligence information provided is accurate, to be of any value it must be interpreted and applied in context to the business plan, capital plan, and a company's projected operational timing. Jackson Hole Advisors market management programs are designed to accommodate these needs.