Investing to please and anger others

By Eric Crampton 15/10/2012 3


I love Amihai Glazer’s little model claiming that voters are motivated by the desire to anger or please others through their vote. The model explains a few anomalies that are otherwise hard to explain, like that voters pay more attention to national election contests than local ones even though the probability of decisiveness in the latter more than makes up for the smaller stakes.

Expressiveness considerations of this sort should not matter in investment markets; expressiveness there gets expensive. And yet we have ethical investment funds for investors who care about that sort of thing. And, yet we have this one.

Moa Beer has been carving out a little niche in getting free publicity by being outrageously blokeishly offensive. When Wellington proposed putting up a Wellywood sign (tacky in the extreme), Moa promised a beer bounty to anybody who knocked it over. They sponsored the Great Easter Bunny Hunt. Gay rights groups haven’t been pleased with some of their marketing campaigns. And they’ve been a bit cute around ASA guidelines regarding swearing in ads. And the Pakistani cricket team isn’t pleased either.

Moa’s now heading for IPO. Here’s their prospectus. If you’re running an investments course, this is one to keep on file. They’ve advertising for Beretta shotguns inside the prospectus, among other things. The Herald has some highlights:

The 132 page blurb channels a mix of the Mad Men TV series and up-market men’s magazine FHM, featuring black and white shots of Moa’s all-male board and management striking macho poses in sharply cut suits, while attractive women in black skirts, white blouses and ties fondle cigars and bottles of Moa.
A section headlined “Investment Highlights” appears beside one such full page photograph, while in another, Moa general manager Gareth Hughes taps out a cigar into an ashtray a model is holding above her head.
Advertisements in the prospectus include plugs for Aston Martin sports cars and Beretta rifles, while a naked woman on a horse promotes Ecoya scented candles, which Ross floated on the NZX in late 2010.

The prospectus seems designed for those who get expressive benefits from their investment decisions. So, then: will expressive bias against them in the IPO from those who are angered by their strategy be outweighed by expressive bias in their favour?

I’m not considering investing. The University sends a hefty chunk of my pay cheque over to the NZ University Superfund for my retirement; I don’t try picking stocks. But if you were a value investor, would you expect that expressive investors would unduly bid up the price, and so you’d be inclined to stay away, or would you expect that IPO-avoidance by ethical types would make this a nice play? I’d lean towards the former.*

I expect that Moa will wind up doing well. Their beer is pretty decent and they’re pretty shameless. That’s not a bad niche. A small brand can afford to have half the world hate it so long as it gets a few people who love it.

Update: The most obvious model of what’s going on is that they’re trying to select for investors who like the current marketing strategy so the shareholders won’t get mad when they do outrageous things in future. It’ll be interesting to see what happens at IPO.

* Not investment advice; I’ve only skimmed the prospectus; form your own judgments, etc.


3 Responses to “Investing to please and anger others”

  • Do investors not look at the effect that all that “edginess” has on the market? Moa is craft beer or at least that’s what they’re trying to present as. The craft beer market in NZ is small and if they hadn’t already done so, they’ve just ignored and/or degraded half of the potential market and left a significant chunk of the rest of the market rather pissed off.

    http://philcook.net/beerdiary/2012/10/13/the-moa-ipo/
    http://publicaddress.net/up-front/moa-sub-standard/
    http://publicaddress.net/8230
    http://www.3rdkingslandirregulars.net/2012/10/the-end-of-beer.html

    They’re not making any money yet. They want to get big enough to get out of the niche market, but they haven’t got the base of support from that niche market from which to start. It’s possible I suppose, though I doubt easy. I would have thought investors would take this sort of thing into account.

    Maybe it’s just me, but I’m failing to see this as anything other than a self inflicted shotgun wound to the foot on the part of Moa. Correspondingly, I’ll be annoyed if they do do well. Though I do hope Dave Nicholls (the brewer) gets out of there a gets back to making good beer, he’s a good brewer.

    • The outrage seems a bit stronger than the prospectus seemed to merit IMHO, but that isn’t what ultimately matters. They are pushing very aggressively on international expansion; suppose the strategy is a somewhat smaller fraction of a much larger potential market. They may also be expecting that more people will hear the name Moa and forget why they heard it, then try the beer when they get to the bar.

      I’m in no position to second guess their strategy. It’s an interesting one. And one that would have me a bit hesitant to put in cash were I a share investor rather than a “give a pile of money to the Uni superfund” investor. But I am absolutely no expert on marketing, brand strategy, or any of that stuff.

  • What people should be looking at here is the value this listing puts on the shares of the founders. Are they really entitled to that much money for building up a company with Moa’s record to date? Remember Facebook.

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