Effectively and efficiently network with analysts and shareholders
Knowing where to start when looking to attract new sell-side followers or maintain effective dialogue with existing ones can be a daunting task. Giving her advice, Informatica’s Victoria Hyde-Dunn, says: ‘For many folks, especially those IR departments that are a team of one or two, the sell side is an extension of the IR department – it helps us tell the company’s story to keep current shareholders engaged and target potential holders.
‘Look at your immediate and adjacent peers, especially if you have several product lines or technology solutions – send them an email, or call them to start a dialogue. Contact your shareholders and ask who they think carries out the best research in your sector. Asking the buy side to make introductions is a great way to facilitate discussion versus a blind email. Introductions to sell-side analysts from other sell-side analysts who have covered you in the past can also help, even if they are from a different sector.’
IROs should also carry out research to pave the way for effective engagement, Hyde-Dunn adds. ‘Talk to the analyst and corporate access team to assess their marketing strengths and decide the best path forward,’ she says. ‘Develop a list of targeted accounts – look at companies that currently own you, used to hold you, don’t own you but have spoken with you or that own you direct and your adjacent peers.
‘It’s about striking the right balance and finding firms interested in hearing your story, versus channel checks and competitive intelligence on others.’
Within an engagement landscape that has dramatically changed as a result of the Covid-19 pandemic, IROs need to consider the format of their sell-side interaction.
‘Hybrid is the new norm,’ says Hyde-Dunn. ‘Most of my sell-siders and buy-siders are away from the office a few days a week. I don’t think road warriors recognized the toll it took being away, the wear and tear on our bodies, the stress from flight delays and cancelations, budget tightening and the overall quality of work-life balance until we were required to stop.
‘Participating in a four-hour virtual Canadian non-deal roadshow is more straightforward to schedule than being away for a few days. While it is not a complete substitute for looking someone in the eyes and reading body language, we have proven it can be a viable and acceptable experience to attract new shareholders.’
Divisions of laborTime is also a consideration, especially for smaller teams where IROs often wear many different hats.
Olga Levinzon is senior vice president of IR at US-French beauty company Coty. Giving her advice on how best to prioritize the time spent among different sell-side analysts, she says: ‘As the number of companies the average sell-side analyst covers has grown meaningfully in recent years, analysts have increasingly focused their attention on a small subset of their stocks. I try to connect with all our analysts at least quarterly but, when organizing conferences, management access and additional events, I prioritize those analysts who take the time to understand our company, who carry out regular fundamental research on our company and our sector, and who are viewed as thought leaders by key investors.’
It’s important to understand and acknowledge that every analyst has his or her own way of working and each can bring something different to the table. For Revvity’s Steve Willoughby, this means an individual approach.
‘I have a pretty good perspective of what the sell side is going through and trying to accomplish so I take the approach that sell-siders are each unique in their personalities, their analysis and their written product,’ he says. ‘While some might be more active and engaged than others, I feel they each bring a piece of the mosaic to try to help investors better understand and value our company. So despite currently being covered by approximately 15 firms, I try to divide my time equally among all of them.’
Asking the buy side to make introductions is a great way to facilitate discussion
Analysts have increasingly focused their attention on a small subset of their stocks
