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Attracting Investment Capital from Europe

June 29, 2012 by James Tickner

Demand for North American Equities is Strong

The political uncertainty in the Eurozone, as we await the outcome of yet another EU Summit as well as a combination of macro factors, are contributing to heightened interest from European investors in North American equities.

From the end of the third quarter 2011 to the end of the first quarter of 2012, European investors have been net buyers of North American stocks to the tune of around $30 billion dollars.

Over the same period, the proportion of the aggregate European investment portfolio attributed to North American equities grew from 19% to 22%.

Combine this with anecdotal information we have heard from the market such as an increase in the volume of meeting requests US companies are receiving from investors in London and the case on paper for a road show to Europe is strong.

Key Markets for European Investor Meetings & Roadshows

But who holds the money in Europe and, more importantly, which investors have the appetite for North American equities?

To put the European market in perspective total European assets stand at $7.7 trillion with just over half of those managed on an active basis. Put another way, that is around half the size of the North American market overall but only just over a third the size if you are only considering the active portion (i.e. the proportion that can be influenced by investor relations).

London is typically the first stop for US companies road showing in Europe . . and deservedly so, considering not only the absolute number of firms and the depth of the asset pool but also because of the overall propensity to invest in North American equities.

A trip to Edinburgh is often combined with a London roadshow and with the concentration of large long only managers with significant pools of assets such as Baillie Gifford and Walter Soctt. Companies can also be very efficient in Edinburgh as most of the top firms can be covered in just a one day trip.

Interestingly, assets of French investors in North American companies are proportionally much lower than the rest of Europe coming in at 17% vs the average of 22% for the region. Combine this with the fact that French investors have seen the strongest redemptions during 2012 (according to Thomson Reuters Lipper) and it hardly strengthens the case for Paris as a potential roadshow destination.

Germany is another market where companies can be efficient in tapping into the capital. In Frankfurt, there are 4-5 firms that would generally warrant management access or a one-on-one meeting with IR such as Deka or DWS as well as a number of others that could be met in a group meeting setting to round out a trip.

For more information on the key markets and buy side institutions as well as practical tips on engaging investors in Europe please contact targeting@thomsonreuters.com or go to IR Hub on your Thomson One terminal.

How to Retain Investor Confidence During A Crisis with Webcasting

February 13, 2012 by Rachel Adams

Is the old adage “Any publicity is good publicity” always true, especially in a field such as Investor Relations? I’d like to suggest that quite often an IR Officer (IRO) would prefer to not be faced with the negative publicity.

If you’ve been reading the business news lately, you may have noticed an increase in claims of fraud and mismanagement, especially affecting foreign-listed Chinese companies. In many cases, once the accusations are made a sharp decline in share price follows immediately.

Should such a situation arise at your company, you must be prepared to communicate to key stakeholders without hesitation. Preparing a plan for responding to negative publicity is indispensible as you do not always have the luxury of time when faced with such a crisis.

Recently a webcasting client of ours was faced with such negative publicity. The company responded by hosting a live in-person conference and invited the investment community to attend virtually via webcast. Hundreds of investors tuned in to watch the CEO respond in his own words. Management walked investors through each of the claims and countered them, providing much needed transparency to strengthen investor confidence. What was critical was that the companies had a response plan in place that allowed them to deliver the webcast within 24 hours of the negative event and take control of the message. Months later, the share price has rebounded and analyst sentiment has improved.

Here are 4 ways you can plan for a negative event and retain investor confidence:

1. Know whom to call when you need to schedule a last minute webcast to reach your community of stakeholders. Choose a trusted, 24/7 global provider that you know is able to react quickly and can deliver within hours when necessary. It would be ideal to identify a communications partner in advance of needing to prepare a crisis response.

2. Ensure your message has global reach. In today’s networked world, the negative news will be distributed and discussed across the Web; therefore you must ensure that your message can reach the same audience. Notify the market of your webcast via a press release, and distribute your webcast not only on your corporate website but also via social media sites and targeted networks.

3. Be as transparent as possible. The management discussion must be thorough in disproving the allegations. In the case study discussed above, the client used an accompanying slide presentation as part of the webcast to add clarity to the speaking points on why the allegations were false.

4. Monitor social media activity. While I believe that many companies will be hesitant to respond on social networks, you must be aware of what is being stated in the Twitterverse and blogosphere, as there will undoubtedly be discussions of the issues on these channels. Coordinate with your PR and marketing teams to understand your corporate social media policies and establish an action plan to respond in a crisis.

In times of crisis, responding quickly and providing transparency through a webcast will help you deliver your message to the marketplace, increase confidence and stabilize sentiment. Communicating via webcasts is not just effective in a crisis but as part of an ongoing IR program that values keeping your investment community engaged with a higher level of frequency for all types of investor communications. This also helps to familiarize your audience with the technology when you do need to reach them during a crisis.

How are you using webcasting to inform and engage the investment community?

Multimedia Communications
This entry was posted in Best Practices and Tips and tagged best practices, investor relations, IR, webcasting by Rachel Adams. Bookmark the permalink. No Comments

Best Practices for Measuring IR Performance – Webinar Q&A: Sell-Side

September 27, 2011 by Arzu Cevik

During a recent Thomson Reuters-hosted webinar on Best Practices for Measuring IR Performance, we received more questions than we could answer in the allocated time.

The majority of questions fell into six major buckets: Sell-side, Buy-side, CEO/CFO-related, Social Media, Measuring the Value of IR and Key Trends for IR.

Over each of the next six business days we’ll answer questions from each of the categories.

Sell-Side

What can I do to increase sell-side coverage? We recently were dropped by a sell-side firm.

1. Do-It-Yourself. Don’t wait – talk to the buy-side directly. It’s important to discuss the loss of coverage (understand the rationale and prepare comments to refute any controversial points) and relay the company’s story to investors who don’t own the stock.

2. Strategize and meet with existing sell-side firms. Ask about their approach to new coverage. Is there a market cap requirement? Are unfavorable sectors no longer being covered?

3. Review your peer group. Are there sell-side analysts following your peers that don’t follow your company? There might be opportunities for coverage.

4. Maintain contact with analysts who have left the firm. There may be opportunities for new coverage if the analyst is hired at another sell-side firm.

What is the average number of sell side analysts that a mid-large cap should have covering them?

While there is no magic number, the average number of sell-side analysts covering a company has been in the 6 to 7 range for the past five years, according to StarMine data.

Listen to the replay of our free webinar, now available on demand.

Investor Relations
This entry was posted in Best Practices and tagged investor relations, IR, IR best practices, Sell-Side, Thomson Reuters by Arzu Cevik. Bookmark the permalink. No Comments

Dodd-Frank is One Year Old: What Has It Accomplished and What’s Next?

September 27, 2011 by Dave Dalpe

Recently I attended a panel organized by the NIRI New York chapter in conjunction with Baruch College’s Center for Corporate Integrity to look at Dodd-Frank and its impact one year after passing. The panel was led by David Rosenburg, a professor at Baruch’s business school, and included Joseph Engelhard from Capital Alpha Partners, William Tanona from UBS and Judy McLevey from NYSE Euronext. The panel provided a nice array of perspectives from multiple stakeholder viewpoints.

A person's shadow is cast on a display showing stock market prices Consensus among NIRI panelists? Regulation should be repealed.
I was surprised that there seemed to be a general consensus among the panelists that Dodd-Frank, although well-intentioned, was poorly devised and should be repealed. The overall sentiment is that the realities of implementing the 400+ regulations that grew out of the law are beyond reasonable, and may actually drive the opposite results from what the act intended. I wasn’t surprised that people felt that way but I thought at least one person would stand up and defend it. The fact that none of the four presenters (experts in their respective fields) did was a bit of a shock.

Law could damage U.S. competitiveness although not as burdensome to small companies.
Part of the case made against the reform act is that it can significantly damage the United States’ competitiveness as a country. As the argument goes, the heavy capital restrictions likely to be imposed on banks will limit lending, thus slowing growth. The result? The U.S. becomes a less attractive destination for investment capital. This may be true, but this also suggests that, in order to be effective, financial firm regulations such as these need to be coordinated on a global scale, not implemented in silos by country. Many would disagree with this, arguing instead that Dodd-Frank takes global needs too much into consideration and that we need a solution customized to the United States.

Another interesting viewpoint was that Dodd-Frank will not place a disproportionate amount of burden on smaller companies, contrary to common perception. Unlike the Sarbanes-Oxley Act of 2002, which did result in smaller companies having to bear significantly larger costs relative to their size and resources compared with larger organizations, Dodd-Frank actually has more significant requirements for larger firms.

This is because the act was, to a certain extent, designed to reign in those very firms who were large enough to impact the broader economy. This doesn’t mean that small firms aren’t impacted, however. One of the panelists gave an example of a small, 12-person bank in Texas who had recently met on four separate occasions with over twenty regulators to review compliance issues.

Some easing of major requirements has already occurred (Volcker rule).
The good news (or bad news, depending how you look at it) is that as the rubber meets the road and the implementation realities set in with the regulators, we are starting to see some easing of the major requirements (e.g., the Volcker Rule).

Other implementations have already been delayed, although in some cases this is simply due to the volume of regulations that need to be implemented. In some ways, Dodd-Frank seems to have been an overreaction to the financial crisis, and may have gone too far.

2012 Elections likely to impact regulations.
The question is, will it safeguard our economy against future, similar crises without sacrificing our nation’s global competitiveness? No one can say for sure, but the rule definitions and implementations over the next year, followed by the 2012 U.S. elections, will determine Dodd-Frank’s impact one way or the other.

What do you think about Dodd-Frank? Has it impacted your company yet? Will the law be repealed? Leave a comment below.

Investor Relations
This entry was posted in IR in the news and tagged Dodd-Frank, IR, IR news by Dave Dalpe. Bookmark the permalink. No Comments

5 Ways Video Enhances Your Investor Relations Website

June 22, 2011 by Dave Dalpe

There are many reasons why we meet others in person when the option is available. It allows us to look the person in the eye, get a sense for who they are and then make a judgment about how worthy they are of our trust, confidence, and even friendship. In our current period of fiscal restraint, most of us have had our travel budgets cut, which has limited our ability to do this. But rather than ratchet up our long-distance phone plans or increase the frequency and volume of our emails (as if that were possible), many of us have taken instead to video as a communication tool, both in our personal and our professional lives. Whether it’s Skype or Google Video Chat at home, or video webcasts, conferences or telepresence at the office, video has emerged as our best alternative when we can’t be everywhere we’d like to be in person. Five F/A-18 Hornet fighter jets of the U.S. Navy Blue Angels leave a long contrail

Now think about this in terms of your investor relations program. You and your management team spend hundreds of hours and thousands of dollars on the road meeting with current and prospective investors. When it comes to an important stakeholder, the first choice is always to meet them in person. But even in boom times when budgets are generous, you can’t be everywhere you want to be. Fortunately, we live in the video age, which is one of the reasons why it’s a great time to be an IR Officer (IRO).

If you haven’t used or considered incorporating video into your IR website, you are close to being left behind. Here are five ways video can uniquely enhance your IR website:

1. Builds trust and credibility.When you’re trying to establish credibility and create a sense of confidence in your words, it’s important for the other person to be able to look you in the eye, read your body language—basically, to size you up in a way that helps them make a decision faster. This type of trust is difficult to establish through written materials, or even over the phone. And to really drive the point home, recent research has indicated that video can impact perceptions of accountability and influence investment decisions.

2. It’s all about REACH.Video enables you to reach more investors than you could ever possibly do through a series of one-to-one meetings, or even the occasional investor conference. In-person meetings will never go away, but it is critical to get out of the one-to-one mentality and start thinking in terms of one-to-many. Not only can you reach more investors with video, but you can do it in a cost- effective way, with technology that has advanced to the point that it’s easy to use even for the least technically inclined.
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Investor Relations
This entry was posted in Best Practices and tagged investor relations, IR, IR website by Dave Dalpe. Bookmark the permalink. 1 Comment

Guidance: To Provide or Not To Provide

May 16, 2011 by Arzu Cevik

Guidance, especially earnings guidance, is one of the most-talked about issues among companies and investors.

Should your company provide guidance? Are investors looking for more guidance metrics? How will this impact my stock? Often, companies look to their peers to see what kind of guidance they are provide and how forward-looking it should be (one year or five years?)

To find out what your peers have been doing – we analyzed and segmented data from our last Investor Relations Best Practices study. We’ve also compared some of the results to a previous study.

Here are some highlights from the IR Study:

Based on results from over 500 IROs we interviewed, nearly three-quarters of respondents indicated that their companies provided some type of forward-looking guidance. This number was down slightly versus the 80% reported in the previous study.
In one-on-one interviews, some companies complained that market and economic volatility has reduced visibility, making it more difficult to provide forward-looking financial guidance with any accuracy.
Micro-cap companies also are least likely to provide guidance (40%), as are Financials companies (55%).
Asia Pacific companies are least likely to provide guidance (45%), followed by Europe companies (33%). Only 22% of North American companies do not provide guidance.

Gain more insight by reading the complete Guidance report in the IR Best Practices Reports section of IRHub. For more information about IRHub including how to subscribe, please email IRHub@thomsonreuters.com.

Investor Relations
This entry was posted in Best Practices, Research and tagged best practices, investor relations, IR by Arzu Cevik. Bookmark the permalink. No Comments

5 Simple Rules for Keeping Your IR Website Current

May 2, 2011 by Dave Dalpe

A few weeks ago, as winter turned into spring (at least according to the calendar—you wouldn’t know it from the weather), I got to thinking about the importance of renewal. With Web-based investor communications never far from my mind, I thought about how often companies review and refresh the way they communicate with their investors, particularly through online channels. Daffodils with the London Eye in the background

When investors visit an IR website that has been neglected, it tells them one (or all) of these three things:

• The company is not concerned with my preferred methods of accessing information about them.

• The company doesn’t invest in IR communications in general.

• The company’s story is not worth telling well.

As an IR Officer, these are not messages you want to convey. Would you send your CEO or CFO to an investor meeting armed with a presentation that hadn’t been updated in a year? Of course not. So why would you pay any less attention to maintaining your IR website, which will reach many more investors?

So how do you keep your online investor communications channels current—especially your primary online channel, your company’s IR website? Here are five tips:

1. Know your audience
It is important to understand what type of investors own or will be attracted to your stock. According to a recent Thomson Reuters survey, 43% of institutional investors and analysts say that investor presentations are the most important content on an IR website (followed by quarterly and annual reports). Retail investors may be more interested in stock and dividend information. Understanding your audience will inform everything you do on your IR website and throughout the rest of your IR program, online or otherwise.

2. Automate wherever possible
Ensure that critical data always gets to your site in near-real time without manual intervention. Press releases, SEC filings and other information that investors rely on to make investment decisions should never be held hostage to sick days or an individual’s to-do list.
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Investor Relations
This entry was posted in Best Practices and tagged investor relations, IR, IR website by Dave Dalpe. Bookmark the permalink. No Comments

Social Media Bleeding into IR

March 24, 2011 by Matt Raymond

Last week, I attended a NIRI (National Investor Relations Institute) Boston Chapter dinner meeting on the topic of social media. The session interested me since research we had done here at Thomson Reuters in 2009 had indicated that social media was of high interest to PR professionals but of little interest to IR officers (who were more focused on analysts and investors). But we’ve started to see a budding interest in social media from the IR side, with sites like StockTwits gaining increased attention.

Rhonda Bennetto, Executive Director, Investor Relations at TVI Pacific Inc. was one of the panelists and provided insight into her own experience as an IRO who has fully adopted the social media mantra. Rhonda began participating in social media by listening to what was being said about the company in social media and finding that only about 40% of it was inaccurate. She now uses Twitter to drive people back to her company’s website for the most current information. TVI also has an IR-focused Facebook page which is used as a discussion board and where announcements are posted in plain English. They also use YouTube, Flickr, and Slideshare extensively. According to Rhonda, her Twitter and Facebook followers now “work for her” in correcting misinformation on the Web.

Listening to what is being said about your company, peers, and competitors does take time which a lot of IROs do not have, so Rhonda recommends looking for vendors who can assist. This allows her to spend more time writing content and doing it in a timely fashion. With social media, you usually can’t wait until something has been vetted internally to post it, but Rhonda makes sure to set expectations with followers on expected turnaround time. She also highlighted the importance of updating company disclosure policies and the need to hold compliance training for anyone who will be speaking for the company.
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Investor Relations
This entry was posted in Best Practices and tagged investor relations, IR, social media, Twitter by Matt Raymond. Bookmark the permalink. No Comments

Study: Buy- and sell-side analysts identify best use of company free cash

March 14, 2011 by Arzu Cevik

In a recent survey of leading buy- and sell-side analysts by the Thomson Reuters Extel Perception team, the best use of free cash is…buybacks!

What do you think of these results? Leave a comment below.

If you’re a Thomson ONE IR client, login for additional insight from this study.

Source: Thomson Reuters (click to enlarge)

Investor Relations
This entry was posted in Research and tagged investor relations, IR, use of cash by Arzu Cevik. Bookmark the permalink. No Comments