Below is a copy of this week's newsletter from IR Magazine. We send these out every week. If you would like to subscribe, please visit our main website and click on the register option.
As the year draws to a close, it’s time to look back at the most read articles on our website during 2012. The top 10 is dominated by features on social media and technology – perhaps unsurprising for an ‘online’ ranking – but stories on roadshows, targeting and CFO-level IR also make the list. As always, we’d love to hear from you if you have any suggestions for topics we should be covering.
10.Western firms move IROs to Asia In this feature, we spoke to three companies – two from North America, one from Europe – on the opportunities and challenges of stationing a permanent IRO in Asia.
9.The perfect shareholder base We asked targeting experts to explain what the perfect shareholder base looks like. Spoiler: they said it doesn't exist.
8.Tomorrow’s IR site, today Two experts looked into their crystal ball to imagine what IR websites of the future will be like.
7.The management of IR Using our surveys of investors and analysts, we analyzed what traits make a CFO popular with the investment community.
6.Roadshow guide to Boston Boston still doesn't get enough attention, claimed roadshow experts in this guide to the city for visiting companies. We run down who to see, where to stay and what to eat.
5.Social media top dogs Many IROs still view social media as more of a risk than an opportunity. This article heard from individuals pushing for a change in attitude.
4.The good and bad of IRO 2.0 2012 saw a slew of social media companies list in the US. They have unique business models, but does their IR break the mould?
2.The investor relations app hub This feature considered which smartphone apps are most useful for day-to-day IR work (as well as which smartphone games keep you entertained in the airport departure lounge).
1.Investors explore social media The number one most read article this year heard from market experts – including Joshua Brown of the Reformed Broker blog and StockTwits' CEO Howard Lindzon – on the extent institutional investors are actually using social media to make investment decisions.
Does a career in investor relations offer a good work-life balance? That's the question we put to visitors to our website over the last month. Just over 40 percent of respondents said 'yes'. The majority were less positive, however, answering either 'no' or 'unsure'.
Neil Stewart, webinar moderator and IR Magazine’s editor-at-large, kicked off the event with a warning to listeners in the US that they might find some of the discussion ‘scary, and even rather shocking.’
He was talking about a growing trend of super transparency – embodied by the IR team at German energy firm RWE. Panelist Gunhild Grieve, head of RWE’s London IR office, explained that as well as offering guidance on the current year, covering a range of key performance indicators, the company also offers estimates on the year ahead.
But what makes RWE’s guidance policy really stand out is its approach to consensus estimates. ‘We have a practice whereby we ask our sell-side analysts to provide us with their numbers: they have them in their models but then [we] also [want them] on a post-restructuring or post-disposal basis,’ said Grieve. ‘We put a revised consensus on our website with those clean numbers, which are comparable with our guidance.’
This is where IROs in the US might start to break a sweat. Growing levels of transparency might be the trend in Europe, but Regulation FD in the US discourages companies from RWE-style openness. Despite this, Jason Whitaker, application specialist at Bloomberg, maintained that an ‘open line of communication’ remains the best practice – no matter where you are or what industry you’re in.
He added that whatever size your business is, if you can give guidance – even in the form of something as simple as a production target – you should be doing it. ‘The evidence seems to be that the more you give guidance, the better your share price,’ he said.
Fellow panelist Chris Bailey, head of global direct investments at Close Brothers Asset Management, agreed. He said that as a fund manager, when ‘people are saying less and less, guess what? We become less inclined to buy their shares.’
Rather than letting macroeconomic ‘wobbles’ deter you from giving guidance, Bailey noted, companies should be doing two things; offering a guidance range and extending predictions into the medium term. A range of between 5 percent and 10 percent offers the leeway that is lost on a very specific number, he explained, while medium-term forecasts encourage your investors to think beyond each quarter – which Bailey said will help attract a more committed investor, too.
‘I appreciate you’ve always got to be careful,’ he added. ‘You’ve always got to factor in what’s happening in the world, but one good thing about a guidance range – particularly something that talks beyond this year – is that you can factor in and absorb some macroeconomic volatility. And on a quarter-by-quarter basis you can say, We’re still on track – it’s been a little bit tough this quarter because of X, Y and Z, but we’re still on track. The market gives you credit for that.’
Below is a copy of today's newsletter from IR Magazine. We send these out every week. If you would like to subscribe, please visit our main website and click on the register option.
Excitement is rising in Singapore ahead of the IR Magazine Awards – South East Asia 2012, which take place tomorrow. As with all our awards, the results are based on a survey of hundreds of investors and analysts. Below, we run down five big questions that will be answered on the day.
1. Who will win the battle of the heavyweights? The five companies up for the grand prix for best overall IR (large cap) have at least six nominations each: CapitaLand, DBS Group, StarHub, CIMB and last year’s five-time winner SingTel. Any one of the five could dominate proceedings.
2. Can anyone unseat SingTel in our regional rankings? Along with its haul of awards last year, SingTel also claimed the number one spot in our inaugural IR Magazine South East Asia Top 25. The rankings are decided by adding up each company’s score across all the award categories.
3. Is time up for Singaporean dominance? Traditionally, companies based in Singapore have performed strongly in our awards, at the expense of those from other countries in the region. This could all change tomorrow as Malaysia’s CIMB is in the running for the large-cap grand prix, plus five other awards.
4. Who will win the mid or small cap grand prix? In this category, there are two further companies from outside Singapore that could snatch a big prize. AmBank of Malaysia and Minor International of Thailand are up against Singapore’s Keppel Land, Venture Corporation and Frasers Centrepoint Trust.
5. Will we see a first-time winner? There are a number of companies appearing on short lists for the first time: Indonesia’s Garuda and XL Axiata, Universal Robina Corporation of the Philippines and Malaysia’s Media Prima.
Hulus Alpay, vice president, investor relations at Medidata Solutions, took over as chair of the world's biggest IR association this week.
In this NIRI video, Alpay talks about his wide-ranging experience (including taking Medidata public in the tough conditions of '09), IR practice today and the development of the profession. 'When you look at the legal profession and when you look at the medical profession, I wouldn't go as far as [saying we are in] our teens,' he tells Jeff Morgan.
US investors are not quite as fond of European equities as they used to be, but the opportunities for investment remain significant, argued Thomson Reuters in a webinar this week.
James Tickner, global head of targeting, and Lou Cordone, head of advisory services for the Americas, spent just under an hour explaining how Europe’s issuers can go about targeting the right US investors.
There was plenty of useful insight in the webinar – below we pull out five takeaways. All data is from Thomson Reuters.
1. Pullback not overdone: US investors have lowered exposure to European and other international stocks thanks to uncertainty in the global economy. The pool of actively managed equity assets on offer remains considerable, however. In addition, US global and emerging market funds have proved resilient to outflows compared with US domestic funds in 2012.
2. Go West: New York is the most popular location for European roadshows but the West Coast has, in general, longer-term fund managers. The average turnover rate for funds is 22 percent in San Francisco and 29 percent in Los Angeles, compared with 34 percent in Boston and 47 percent in New York (the average for the US as a whole is 35 percent).
3. Regional differences key: around half of the European equity actively managed in the US is found outside the main money centers, but each region has its own investment preferences. The Midwest likes small and mid-caps, for example, while the West Coast favors tech stocks.
4. No big fiscal cliff impact yet: the fiscal cliff is on the minds of US investors but hasn’t caused any significant change in strategy, despite the likelihood that taxes on dividend payments will rise. There is a reluctance to commit capital among income-focused funds, however.
5. Who’s buying?: leaving aside the largest 14 US holders of European stocks, here is a list of the top buyers over the last 12 months: T Rowe Price, TIAA-CREF, JPMorgan Asset Management, Columbia Management Investment Advisers, Jennison Associates, Lazard Asset Management, Morgan Stanley Investment Management, Wells Capital, Eaton Vance and Fisher Investments.
One of the key topics on readers' minds right now is the US fiscal cliff, so below we've posted our newsletter from last week about what its impact on IR could be.
Last week, after a record $6 bn spent on campaigning to end up with the same president in the White House and Congress still dominated by the Republicans, Americans woke up with what must have felt like the most colossal hangover and a terrible, sinking realization: they had less than two months to steer the country away from a fiscal cliff that could put the US back into recession.
What cliff, many wondered, considering 19 of the top 20 news stories on any given day during the last year were about the presidential election (and the 20th was about the Middle East). They could easily have missed the $600 bn bundle of tax increases and spending cuts that will kick in on January 1 unless both parties agree on a deal – and that last is why the fiscal cliff hardly figured in the election bickering.
Lest all you IROs out there reckon the fiscal cliff to be somebody else’s problem, here’s how it directly affects you, as long as you have US investors:
1. With no deal, Bush-era tax cuts would vanish and capital gains tax would go from 15 percent to 20 percent. Dividends, now taxed at 15 percent, would be taxed as regular income, which for high earners could be more than 40 percent. That’s a big difference.
2. Traditional year-end portfolio turnover would thus be turned upside down. Instead of selling underperforming stocks to offset profits and reduce taxes, investors might unload their winners to avoid higher capital gains tax in 2013.
3. Income stocks would be dogs, not the darlings they have been until now. Already some companies are shifting dividend payouts ahead of year-end to save their investors tax heartache in 2013.
4. With dividends out of favor, investors would turn their backs on blue chips and look elsewhere for yield – high-yield bonds, maybe, or emerging markets. Worse, equities as a whole, having already experienced massive net outflows over a long period, would go even more out of fashion if capital gains tax goes up. Retail investors have all but given up on equities. This could push them over the edge.
5. That market slide the day after the election? Mitt Romney’s camp would have you believe it was Wall Street disappointed that their man didn’t get in. But it would have happened no matter who was elected as the fiscal cliff suddenly hove into view amid dissipating clouds of red, white and blue balloons.
6. The post-election dip was as nothing compared to what will happen when the fiscal cliff is inevitably averted but Americans wake up on January 1 with an even worse hangover and the realization that the US will hit another debt ceiling around late February or early March. The Republican-controlled House could sulkily replay its August 2011 bipartisian brinksmanship and put the US face-to-face with another debt downgrade.
So stop trying to catch up on Homeland and switch back to MSNBC or Fox News, as the case may be. Politics are still very much your problem.
The most recent IR Magazine Webinar, held on November 8 this year, addressed a crucial issue for IR professionals everywhere: convincing the C-suite that an investor relations department has great value for any publicly listed company.
‘The financial crisis was obviously a huge challenge,’ said moderator Neil Stewart, quoting John Andrews, former head of IR at Citigroup, who joined the firm at the height of the crisis. ‘The silver lining was that it was good for IR. The roll of reputation became paramount.’
But as economies continue to struggle and headcounts fall across investor relations departments, panelists at the IR Magazine Webinar sought to uncover what Stewart called the Holy Grail of IR: proving the value of investor relations to management and investors. What makes this such a tricky subject is that IR is so difficult to quantify: do you talk about how many conferences you’ve attended or concentrate on whether you actually secured new investment?
‘I don’t think the ‘one true measure’ really exists,’ said Beate Melten, director and global head of IR at Citi Depositary Receipt Services, and one of the webinar panelists. To really demonstrate your worth to management, Melten recommended building credibility with investors. ‘Who do investors turn to first? Do they call you? That is certainly something you can use to prove your value to management,’ she pointed out.
To turn yourself into a reliable IRO – and prove your worth to investors – is an increasingly challenging job, however. ‘Investors today are expecting much more from you,’ explained Melten. ‘You need to know about your company, you need to know about your competition, you need to know about the macro environment. The world has become much smaller; today you are in competition with every company around the globe that fits into a certain investor base.’
Fellow panelist Tim Craighead, director of Asian research & senior gaming analyst at Bloomberg, agreed. A successful IRO must have an ‘up and out’ approach, addressing both management and investors, with information flowing both ways, he said. ‘If you have your finger on the pulse, management is clearly going to be relying on you for market intelligence and market insight,’ he noted.
As well as being an expert on your own company, a deep understanding of your peers and your market will help you to predict problems, manage any issues and minimize surprises, added Craighead, all of which your investors will appreciate – as will your senior management.
These ‘best practices’ remain the same whatever situation your company is in, said Craighead. If you’re doing well, you need to know what issues your competition is facing; if you’re struggling, ‘look longer term and think about what could cause the upturn, because that’s the core of the story you want to be telling potential investors,’ he explained.
In fact, Eva Chan, chairman of HKIRA and head of IR at CC Land Holdings, suggested IROs can use a downturn to their advantage to really show their worth. Even if investors are less interested, you need to ensure analysts keep their eyes on your company, she added.
Suki Wong, head of IR at Anta Sports Products, emphasized the importance of communicating the brand and bridging the gap between management and investors, adding that managing investor expectations is one of her priorities. ‘Don’t over-promise – always tell the truth,’ she advised.
Going back to how exactly you measure the value of IR, Wong added: ‘We suggest that senior management doesn’t use the share price as the benchmark to evaluate IR effectiveness.’
This is something fellow panelists Melten and Craighead also recommended. ‘Don’t fall into the trap of allowing anyone to take the stock price as a measurement,’ said Melten. ‘The stock price relies on many things you have no control over – like the financial crisis, for instance.’
Quoting Lynn Tyson from her days at Dell, Melten added: ‘In the IR department, you should measure only what you can influence.’
Listen to the full webinar, Proving the value of IR to senior management and investors, and hear more from: -Neil Stewart, editor-at-large, IR Magazine -Tim Craighead, director of Asian research & senior gaming analyst, Bloomberg -Beate Melten, director and global head of IR, Citi Depositary Receipt Services -Suki Wong, head of IR, Anta Sports Products -Eva Chan, chairman of HKIRA and head of IR, CC Land Holdings
US comedian Stephen Colbert tackled the thorny issue of high frequency trading in his show this week when he interviewed business author Christopher Steiner about his new book Automate this: how algorithms came to rule our world. Is today's stock market a safe place for retail investors, asks Colbert during the interview, or would it be safer to stuff your money in a sock and throw it in the ocean?
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