Tips seven, eight and nine
Covid accelerated many nascent trends, including direct engagement.
In a September 2021 report, Bloomberg Intelligence writes: ‘We see a shift toward greater direct contact with companies, aided by the coronavirus-induced work-from-home trend that hastened the move to virtual meetings. While larger firms have built their own internal corporate access teams, we see signs smaller firms are gradually following suit, which will redefine the future of corporate access.’
For example, during the pandemic, Caspar Tudor of Waters Corporation held virtual, hour-long IR lunches on the heels of earnings announcements. Short meetings like this, he says, can be ‘a very efficient way to reach investors’.
Verena Nicolaus-Kronenberg of E.ON notes that IROs everywhere have ‘thankfully’ become much more accustomed to videoconferencing.
Now when her company targets the US, she explains: ‘We don’t travel there four times a year anymore: we go twice in person and twice virtually. We’ll see where it all settles, but I’d assume we’ll go to 50/50 virtual versus in-person investor meetings [in the future].’
We don’t travel to the US four times a year anymore: we go twice in person and twice virtually
‘Cold-calling portfolio managers is tough,’ observes Kim MacEachern, formerly of DIRTT Environmental Solutions. Better, she’s found, is gathering the initial intelligence and then partnering with brokers that have their own networks for reaching out to prospects in what she’s dubbed a ‘hybrid’ approach to engagement.
MacEachern recently began approaching brokers, telling them she plans to contact certain portfolio managers and would appreciate them reaching out, too. ‘For them, being given information and told, These individuals have a high likelihood of being interested in our story, could you go out and chase them? That was really well received,’ she says.
In another twist, MacEachern found that current investors can help IR broaden its broker network. Through conversations with one of her European, impact-oriented investors, she was introduced to a broker with a knack for securing meetings in the impact-investing space.
During Covid, that broker assembled a non-deal roadshow for DIRTT in Europe and ‘we presented our story and got exposure to a dozen great, high-quality names,’ she recalls. ‘Ultimately, it’s on you to deliver the story when given the opportunity. Especially when you have a good story to tell, the Street’s always interested.’
Kim MacEachern, formerly of DIRTT Environmental Solutions
Unlike with traditional sales, where a customer either buys a new outfit or leaves the department store empty-handed, investor relations meetings can be something of a black box. The chemistry may be great, but too often the IRO hears nothing afterwards.
In the heyday of broker-organized meetings, investors tended to resist opening up to brokers about their honest impressions of a company. Even when they did, brokers were often reluctant to deliver bad news to IROs and sometimes softened the blow or avoided the topic altogether. As IROs and investors begin to engage directly, feedback has improved thanks to the openness of the dialogue and the lack of intermediaries.
What’s more, some IR technology solutions have embedded feedback functions as a routine part of the communications loop. With features that automatically request feedback, IROs have a better sense of where they stand. Remember, even negative feedback presents an opportunity to hone an investment pitch.
It’s still early days for direct interactions between asset managers and corporates. While both sides seem eager to explore the new possibilities, it remains to be seen exactly how etiquette and customs around communication between corporates and investors will evolve.
No matter how the rules of investor engagement change in the future, however, one thing is clear: new technologies and rapidly changing norms are opening up possibilities that for decades remained closed. For well-prepared and proactive IROs, fresh opportunities are out there, waiting to be understood and seized.
The more people talking about your company, the better. Ultimately, it’s on you to deliver the story when given the opportunity
