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Targeting Investors in Europe: Webinar – May 29

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COMPLIMENTARY WEBINAR

Wednesday, May 29, 2013
11 am New York Time, 3 pm London Time, 4 pm Paris Time

Interested in Targeting Investors in Europe? Register today! 

European investors continue to geographically diversify their portfolios. This trend is creating tremendous opportunity for North American companies to attract European investment capital.

Join this session of our complimentary Investor Targeting Webinar Series to understand:

  • The challenges North American companies face in attracting investors in Europe
  • How European investors differ from those in other regions
  • Which European locations offer the greatest investment opportunity to North American companies
  • How to position your investment story to a European audience

 

 A replay of the live webinar will become available a few hours after the live event so you can also access it on-demand.

If you have already registered for our Investor Targeting Webinar portal, there is no need to re-register.


This entry was posted in IR Thought Leadership, Targeting Investors in Europe and tagged , , , , , by Arzu Cevik. Bookmark the permalink. No Comments

How Canadian IR Teams Can Effectively Target International Investors

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Canadian Investor Relations (IR) teams: Are you interested in effectively targeting international funds & investors outside of Canada?

Listen to our Head of Global Investor Targeting, James Tickner, as he discusses targeting tips for Canadian companies with the President & CEO of the Canadian Investor Relations Institute (CIRI), Yvette Lokker.

Watch the video here at CIRI‘s website:  http://bit.ly/15NLPDJ

Gain insights about investor targeting in this IRchat video and learn:

  • What is the top reason why Canadian companies should be targeting international funds now?
  • Which European and Asian markets are the most attractive for targeting investors?
  • The top metrics buy-side investors value.
  • Which sectors are in favor now with the buy-side.
  • How to measure the success of your road show.

 

To learn more about targeting investors including identifying which investors can impact your valuation & shareholder base and how you should tailor your message for each targeted investor, please contact james.tickner@thomsonreuters.com

 


This entry was posted in Best Practices and Tips, Investor Relations, Investor Targeting, Investors, Road shows, Targeting Investors in Europe, Tips for IROs and tagged , , , , , by Arzu Cevik. Bookmark the permalink. No Comments

SEC Says Social Media OK for Corporate Disclosure

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On April 2nd, the Securities & Exchange Commission (SEC) stated that companies may use social media for corporate disclosure and still be compliant with Regulation Fair Disclosure (Reg FD), if they tell investors ahead of time where to look.

Social media platforms companies can use include Twitter and Facebook in addition to a company’s own website, which many companies already use. This report comes after the CEO of Netflix, Reed Hastings, posted on his personal Facebook page stating that Netflix‘s monthly online viewing had exceeded one billion hours for the first time.

Netflix did not file an 8-K and did not issue a press release, as is customary with most companies when issuing material non-public information, as per SEC requirements. Mr. Hastings had not previously used his Facebook page to communicate information about Netflix. But social media platforms such as Twitter and Facebook did not exist when the SEC created rules about disclosure under Reg FD.

Yesterday’s announcement from the SEC helps to clear up any uncertainty about using social media and being Reg FD compliant, which was a major concern for many IROs.

From the SEC: “Regulation FD requires companies to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively. It is intended to ensure that all investors have the ability to gain access to material information at the same time.”

What does this mean for your company? If you haven’t already started using social media, will the SEC’s announcement be the catalyst you need to start using Twitter to communicate company information? The likelihood that companies will use social media exclusively to distribute material, non-public information is low.

IROs that have a corporate IR Twitter account, do communicate information about the company but with redirects back to the company’s website. All external communications have to be approved by a company’s compliance department and the rule of thumb among investor relations teams is to use a mix of distribution methods to communicate information including:

Top 6 IR Communication Tools 

1) Filing with the SEC

2) Issuing a press release

3) Updating the company’s website

4) Using Twitter to redirect to a company’s website

5) Email distribution

6) Web-based disclosure

IR teams use a combination of all of these mediums to ensure their messaging is distributed to as wide an audience as possible. Using Twitter or Facebook alone doesn’t ensure that your earnings release will be picked up by the news services, such as Yahoo Finance, at least not yet.

Thus, social media is one way to distribute information but it may not be used as the exclusive tool for IROs to disseminate information.

However, companies that specialize in social media may take this opportunity to start using their own social media platforms to exclusively distribute material, non-public information. One such example? Perhaps Facebook (Nasdaq: FB). 

To read the full release from the SEC, please click here: http://1.usa.gov/12derR7

Will you start using social media for investor relations? Leave your response.


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IROs Select Thomson Reuters as their Favorite IR Services Provider

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IR Magazine conducted a global IR survey in 2012 asking investor relations officers questions related to IR departmental responsibility, outsourcing and external IR service providers.

In the area of external IR service providers, the overwhelming majority of IR officers voted  Thomson Reuters as their favorite  provider.

Thomson Reuters was voted the top provider globally and across all regions: U.S. & Canada, Europe and Asia. Clients cited our breadth of offerings, responsiveness, quality of service, timeliness and reliability as key reasons for their top vote.

Thank you to everyone who voted for us. Exceeding your expectations is and will remain our #1 priority.

To read the full report from IR Magazine, please use the link below:

http://bit.ly/Yy0Yiy

 


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Mutual Fund Investors are from Mars, Hedge Fund Investors are from Venus

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4Q12 Global Investor Ownership Analysis: Mutual Fund Investors are from Mars, Hedge Fund Investors are from Venus

What Types of Stocks Did the Buy-Side Favor in 4Q? Which Metrics Were Popular?

In 4Q12, Mutual Funds have been focusing on buying into solid, profitable, dividend paying companies while hedge funds have been buying ‘unloved’ stocks with room for margin expansion and scope to return cash to shareholders.

Based on this data, and based on our conversations with the Street, we believe Hedge Funds are focusing their attention on the ‘laggards’, both in terms of financial performance versus peers and stock price performance.

For both Mutual Funds and Hedge Funds, trading volumes remain an important gating factor in selecting which stocks to buy:

  • Mutual funds looking for higher return metrics. Mutual Fund managers are looking for companies with attractive levels of profitability and returns, buying stocks with solid Return on Equity (ROE at least 5.7%) and attractive Return on Assets (ROA at least 6.9%).  By contrast, Hedge Funds are prepared to buy stocks with much lower levels of return; 290 basis points lower ROE and 120 basis points lower ROA, on average.
  • When it comes to net profit margins there is a similar story. Mutual Fund managers are typically buying much more profitable companies (net margins of at least 3%) while Hedge Funds are looking for stocks with profitability nearly half that level (1.6%).
  • Comfortable financial headroom.  Another top metric that Mutual Funds are screening for is interest coverage (EBIT/Interest expense) with investors commonly looking for companies with a robust 2.7x interest cover. But Hedge Funds are prepared to less comfortably geared companies, at 1.9x interest cover.
  • Hedge Fund investors are not looking for yield.  A popular screen among long-only managers is dividend yield; they’re looking for 1% on a historic basis (where forward yields are screened for, investors are looking for a minimum of 1.3%). Interestingly, hedge fund managers are much less focused on yield; in fact they are prepared to buy into stocks that do not currently pay dividends.
  • Trading volume still an important gating factor. Our analysis points to mutual funds only investing in companies where the 30-day average stock volume is greater than 0.2% of the shares outstanding.*

*For example, a company with 100 million shares would have to have a 30-day average stock volume of 200,000 shares.

What is behind this trend?

We believe that hedge funds are focusing more on the laggards within each sector.  With the market having rallied over the course of 2012 (although it didn’t necessarily feel like it), Hedge Funds have been looking for stocks that have been left behind, or where profitability is low, with scope to improve.

2012 has also witnessed the continued rise of activist funds, buying into companies with lower levels of profitability versus peers and agitating for change, or demanding return of cash to shareholders.

This approach is not just restricted to the well known Activist funds (such as Icahn, Pershing Square, ValueAct and many others) but also to the groups of Hedge Funds whose strategy is simply to follow the better known agitators.

THOMSON REUTERS CONTACTS

Chris Collett, Global Head of IR Advisory Services, chris.collett@thomsonreuters.com

David Levine, VP, Global IR Analytics, david.levine@thomsonreuters.com


This entry was posted in buy-side investment decision-making process, Buy-Side Investors, Stocks and tagged , , by Arzu Cevik. Bookmark the permalink. No Comments

Understanding Recent Equity Inflows: Is There a Shift in Investor Preferences?

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The week after the resolution of the fiscal cliff, in which Washington avoided over $500 billion in automatic spending cuts and tax increases, investors poured an astounding $9.2 billion into US equity markets, which rallied significantly in the process.

This led much of the media and many sell side analysts, to declare the ‘historic equity inflows’ signaled the beginning of a ‘great rotation’. As Reuters journalist Mike Dolan puts it, “The gist of the [‘great rotation’] argument is that investor holdings of now expensive, ultra-low yielding government debt – following a virtually unbroken 20-year bull market in bonds – are ripe for rebalancing.

The attraction of relative and absolute valuations in equity will coax the outflow to stocks.” Such a paradigm shift in investor preferences would have broad implications for companies seeking to attract investors to their stock. Under a ‘great rotation’ type scenario where investors are flocking bond markets to rebalance towards equities, that objective would be made easier, and one would expect such inflows to continue and be supportive of a broader market rally.

However, if the ‘great rotation’ is nothing but a myth, then the nature of the recent equity inflows may be more of a transitory phenomena than a broad based shift in investor preferences.

Recent data has cast into doubt the existence of a ‘great rotation’. Bond flows haven’t skipped a beat…

Source: Thomson Reuters Lipper Funds Data. Flows include both mutual funds and ETFs.

Note: Data is obtained on a weekly basis; dates indicate the Friday of that week.

…and money market flows YTD have been mixed at best. And while equity inflows have been substantial, most of that money has gone abroad.


Source: Thomson Reuters Lipper Funds Data. Flows include both mutual funds and ETFs.

Note: Data is obtained on a weekly basis; dates indicate the Friday of that week.

In fact, domestic equities have not seen a steady inflow; while the first and last weeks of January saw very large inflows, investors drew some of their money out of the market in the second and third weeks.

So evidence for the great rotation simply isn’t there—that’s not to say this event won’t happen at some point when the macro environment improves and interest rates begin to rise, just that it hasn’t happened yet. Still, cumulative domestic equity inflows YTD have been impressive enough to warrant an explanation.

If it’s not a rotation away from bonds that’s bringing money into the equity markets, where is the money coming from? We believe this is an important question to ask, as it can give us insight into (i) how long these equity inflows will continue and (ii) the sustainability of this ongoing rally.

Many analysts, including Andrew Hollenhorst at Citi and Jeffrey Hopson at Stifel Nicolaus, believe the significant amount of accelerated dividend and bonus payments—paid out in the run-up to the fiscal cliff to avoid expected tax increases—are the best explanation for the recent jump in equity inflows.

First, data from the Federal Reserve shows an unusual climb in deposit inflows during December, supportive of a one off income increase. This was corroborated by data released by the Bureau of Economic Analysis last week, which showed an abnormally high increase in December personal income.

Accelerated bonus and dividend payments would explain the jump in (i) bank deposits and personal income in December and (ii) large deposit outflows and money market fund/equity/bond inflows in the first week of January. Thus, investors appear to be re-investing these one-off income payments rather than rotating out of bonds into equities. Given this is a one-time source of income, the duration of these equity inflows is likely more transitory in nature than one would assume under the ‘great rotation’ scenario.

In summary, the shift towards equities may well occur as part of a long-term trend when the macro environment improves and interest rates begin to rise. That being said, that time has not yet come. Recent equity inflows are not only disproportionately international, but also more likely a transitory phenomena. As such, IR teams should refrain from operating under the assumption that investor preferences are undergoing a broad based shift towards equities.

For more information, please contact Ted McHugh at edward.mchugh@thomsonreuters.com


This entry was posted in Buy-Side Investors, Investor Relations, Market Insights and tagged , , , by Arzu Cevik. Bookmark the permalink. No Comments

Understanding Investor Behavior: Trends in Buying & Selling Large-Cap Stocks & the Implications for Small-Cap Stocks

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Want to better understand how buy-side investors behave when buying and selling large cap stocks? What are the implications for small cap stocks?
Our analytics team has reviewed five years’ worth of data to understand trading patterns among the buy-side.  Read more to learn how you can benefit from this analysis, regardless of your market cap.
  • Investor Relations teams at large cap companies have to deal with investors selling out completely less often than their smaller cap brethren – that’s the conclusion from research from our IR Analytics team.
  • But on the flip side, there are fewer brand new investors taking entire positions in the stock.
  • The Thomson Reuters Investor Relations Analytics team (based in San Francisco), spend their days (and many nights) immersed in data that is relevant to our IR clients, including looking for trends in ownership among institutional investors.
  • In the course of a year-long analysis into understanding & modelling U.S. investor behavior, they have found a number of fascinating insights.
  • When reviewing the trends in ownership over a five-year period, the tendency is for investors in large cap companies to ‘trade around’ their positions, rather than to sell out or buy-in completely.
The chart below shows the historic trend for a select group of small and large cap stocks using public data:
  • The proportion of new buyers initiating a position or selling their entire position in a stock is inversely related to the stock’s market cap and to the number of holders. In other words, the larger the stock, the fewer the number of completely new buyers or existing holders who sell out entirely.
  • Turnover in the investor base of large cap companies is driven by churn from existing holders, who tend to reduce or increase existing positions. Inclusion in indices and wider recognition of large cap companies tend to drive existing holders to ‘trade around’ their position rather than exit entirely.
  • Although there are fewer complete sell outs for large cap companies, the flip side is that there are fewer opportunities available to find entirely new buyers.
  • For smaller cap companies, it is far more common to see institutions entirely selling out of their position, but also more common to see investors initiate a brand new position in a stock.
  • For smaller companies, investors tend to have a more clear-cut approach, of taking a new position or exiting entirely.
What are the implications for IROs?
  • For IROs at large cap companies, the take-away is that investors tend to fully sell-out or buy-in relatively rarely. As a result, targeting strategies need to be adjusted. Finding entirely new buyers of the stock is a relative rarity.
  • A company is 3-4 times more likely to experience buying from an existing holder of the stock than from a new buyer, so IROs need to look for opportunities among their existing shareholder base.
  • Similarly, existing holders may be unlikely to sell 100% of their position, but substantial selling pressure can stem from current holders lightening their positions.
What are the implications for IROs of smaller companies?
  • The balance of probabilities is much more even between investors trading around their current position and buying in, or selling out completely.
  • There is more of a need to find brand new investors in the stock, to replace the sell-outs but even here, trading around an existing position can be substantial.

Are you interested in learning more about investor behavior & investor targeting strategies?

We’ll be hosting a series of free targeting webinars as part of our IR thought leadership program this year. The first webinar will focus on Rethinking Your Targeting Strategies and will take place on Feb. 27th. More details to follow.
Thomson Reuters Contacts:
Chris Collett, Global Head of IR Advisory Services
chris.collett@thomsonreuters.com
 or
David Levine, Vice President, Global IR Analytics
david.levine@thomsonreuters.com

This entry was posted in buy-side investment decision-making process, Buy-Side Investors, Investor Relations, Stocks, Tips for IROs, Uncategorized and tagged , by Arzu Cevik. Bookmark the permalink. No Comments

ROE – Top Investment Metric for Buy-Side Investors

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What types of stocks are investors buying?

We analyzed over 25,000 mutual fund portfolios globally in 3Q12 and found that Return on Equity (ROE) was the top investment metric for investors knocking liquidity into 2nd place for the first time in 2012.

Trading volumes became the most important screen for mutual fund managers and hedge fund managers alike in the first two quarters of 2012, as liquidity in the market plunged.

The ability to trade in & out of stocks without adversely affecting price is a serious gating factor for most investors and by extension, a challenge for IROs.

Volumes are still very important but now of the top eight fundamental screens, three relate to company profitability and returns, in particular ROE, ROA and net profit margins.

We run through these and other fundamental screens for mutual funds in more detail below:

•    Profitability is the key attraction. Investors are looking for companies with attractive levels of profitability, buying stocks with solid Return on Equity (ROE at least 5.8%) and attractive Return on Assets (ROA at least 6.8%). Net profit margins need to be solid, at least 3.1%.

•    Comfortable financial headroom.  Another top eight metric that mutual funds are screening for is interest coverage (EBIT/Interest expense). In other words a company’s ability to make its interest payments. Investors are typically looking for companies with a robust 2.7x interest cover.

Interestingly, this factor shot to prominence during the financial crisis – during the bull market years of 2005 and 2006, there was not a single metric focused on balance sheet strength!

•    Investors are also looking for yield.  A popular screen among portfolio managers is dividend yield, looking for 1% on a historic basis (where forward yields are screened for investors are looking for a minimum of 1.5%). The focus on dividend yield has become popular in late 2011 and into 2012, with yield oriented funds seeing strong inflows.

•    Valuation is important, but not a critical factor.  Valuation is another top eight fundamental factor.  We screen for a range of valuation metrics, but find that a composite approach works better than focusing on a single metric, such as PE.

We use an approach that ranks all companies from 1 to 100 (with 1 being the most expensive and 100 the best value), based on six measures, including EV/Sales, PE and Price/ Cash Flow.* Investors are typically buying companies ranked 34 and above, indicating that they’re focused on reasonable value stocks, but not necessarily the cheapest.

•    Trading volume still an important gating factor. Our analysis points to mutual funds only investing in companies where the 30 Day average stock volume is greater than 0.2% of the shares outstanding. For example, a company with 100 million shares would have to have a 30 day average stock volume of 200,000 shares.

What do investors want? Solid, profitable companies with solid balance sheets, dividends and modest valuations. 

If you are interested in learning more about what types of stocks investors are buying and/or about the valuation methodologies, please leave your questions below and/or contact your advisory services analyst.


This entry was posted in buy-side investment decision-making process, Buy-Side Investors, Investor Relations, Investors, Stocks, Top investment metrics and tagged , by Arzu Cevik. Bookmark the permalink. No Comments

IR Thought Leadership Webinars – 2013

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As we near the end of the year, we’d like to thank everyone who joined our Investor Relations Thought Leadership webinars, either live or via on-demand. We hope you found our topics & insights helpful.

We’d like to garner your feedback to help shape our IR Thought Leadership content for next year’s webinars.

What topics would you like to learn more about in 2013?

Please leave your feedback by responding to this post. We’ll take all of your feedback into consideration.

Thank you.

Happy Holidays!


This entry was posted in Best Practices Webinars, Investor Relations, Tips for IROs and tagged , , by Arzu Cevik. Bookmark the permalink. No Comments

New EU Short-Selling Rules – What IROs Need to Know

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New European Union (EU) transparency rules introduced in the past week have brought an unprecedented level of disclosure for investor relations teams into the funds that are short-selling their shares and those of their peers.

What’s changed?
Until now there has been a patchwork of regulation in Europe relating to short selling, mostly introduced hastily in response to the 2008 financial crisis and its aftermath; and previous disclosure requirements for short selling varied from country to country.

In the last week, new EU wide regulation has come into force, which mandates:

•    Investors must disclose short positions of 0.2% and above to regulators
•    Positions of 0.5% and above are publicly disclosed by the regulator on their websites
•    The disclosure regime applies to any stock with a primary listing in the EU
•    The disclosure requirements apply to any investor or hedge fund, no matter where they are located globally

For the first time, IROs can actually see the names of the institutions that have substantial short positions in their shares!

For insights on the short-selling activity of major European investors and for strategies for dealing with short-sellers, please contact Chris Collett at chris.collett@thomsonreuters.com


This entry was posted in Best Practices and Tips, Short-Selling, Tips for IROs, Uncategorized by Arzu Cevik. Bookmark the permalink. No Comments