Capital markets days can be a great way for IR teams to own the equity story, as long as they have something new and interesting to say
IR Magazine presents awards for best investor and analyst days around the world. These capital markets days offer an unfiltered opportunity to demonstrate the bench strength of a company’s management team and, if executed well, can provide clarity on its equity story. But these events aren’t cheap, and if you’re asking your investors and analysts to travel in order to attend, there are expectations in terms of the quality of the content.
In this article we’ll look at some examples from recent IR Magazine Award winners to get a better sense of what makes an outstanding investor day.
Popularity of investor days Before examining the best practices around investor and analyst days, it’s helpful to understand how frequently they happen, why they’re held and how popular they are. IR Magazine’s 2018 Investor Engagement report surveyed 828 IROs and members of senior management teams and 446 members of the investment community (buy-side portfolio managers, buy-side analysts and sell-side analysts). One investor relations officer in London summarizes the impact capital markets days can have in a response to the survey: ‘Capital markets days seem to have the most direct effect on the investment community. The last one we held led to four sell-side upgrades.’
JPMorgan Chase won the best investor meetings prize at the IR Magazine Awards – US 2019. For Jason Scott, managing director and head of investor relations at the company, capital markets days are a useful tool for self-discipline. ‘Investor days are a massive process… they involve so many people, from the CEO down to virtually everyone in the finance and reporting function,’ he told IR Magazine in 2018. ‘It’s really part of the company’s discipline: to say what our strategic priorities are, to set goals and targets and then hold ourselves to them.’
More than two thirds (68 percent) of the respondents from the investment community say they find investor and analyst days to be valuable, with 23 percent neutral and just 9 percent saying they’re not valuable. This places investor days broadly on par with the results for roadshows and direct meetings, such as phone calls and in-person meetings. Site visits are by far the most popular form of interaction with corporates, while conferences are deemed to be the least valuable.
Investor and analyst days are seen as most useful by the investment community when they provide a deeper dive into company strategy, present a deeper bench of senior management beyond the CEO, CFO and IRO, or discuss a change or development in the company story.
But there are also plenty of companies that host investor and analyst days when they don’t need to, says Justin Patterson, senior research analyst for internet, digital media and travel at Raymond James Financial. ‘The one thing I want to see is an optimal use of time,’ he explains. ‘Some people just do a check-the-box analyst day every year and have nothing to say – that’s not needed. Plan when you have something new to say, when there’s an important update around the business and the narrative is changing, or when you’re entering a new business unit and you want to get ahead of it.
‘Make sure there’s some piece of the story that’s interesting. When it’s just maintaining the status quo and nothing has changed, you’re going to see a lot of boring analyst coverage and you’re not going to get the results you want from it.’
David Lopez, portfolio manager at Grassi Investment Management, agrees. ‘When there’s a material change – maybe a crucial acquisition that’s going to change the direction of the company – that’s when I’m interested in going to an event, so that I can get a sense of how my thoughts might change,’ he says. ‘When there’s no strategy change, I’m going to stay at my desk and read the analyst notes afterwards.’
Frequency of capital markets days Given the investment of time and money required to host an investor and analyst day, the advice from Patterson and Lopez is especially pertinent for IR teams. It’s perhaps unsurprising, then, that IR Magazine’s research shows large and mega-cap companies are far more open to hosting these capital market days than their small and mid-cap peers. For small and mid-cap firms, investor conferences and roadshows are the primary venue for investor meetings, with only around half of respondents spending time on site visits and investor and analyst days.
In terms of the frequency of capital markets days, the global average is 0.8 per year. In North America and Europe, the median response is 0.6 events hosted per year, suggesting that respondents in these regions organize one roughly every other year. In Asia, the responses are noticeably different, with a median response of 2.1 investor and analyst days per year.
‘I prefer to go to an analyst day every two or three years,’ says Lori Keith, portfolio manager at Parnassus Investments. ‘I’ve sat through many analyst days where there was really not much to report. For those companies, the audiences will dwindle year by year, especially if there’s no material update.’
Broadcasting the event It’s important for IR teams that do decide to host an investor and analyst day to make the most of the effort and resources they expend; and Katrin Pohl, head of account management for investor relations at EQS Group, says companies are increasingly looking to livestream their capital markets day online. She explains that companies that have experimented with hybrid investor meetings – hosting both an in-person and virtual meeting format – are becoming more open to using the technology for other investor events.
This was the case for Wix.com, which hosted an investor and analyst day in 2018 and livestreamed the event on YouTube. Wix.com has a two-person investor relations team in the US, but the rest of the management team is based in Tel Aviv, Israel, where the company is headquartered, so ensuring an effective video stream was important to the company.
‘When we held our analyst day last year, we streamed it on YouTube, which was free and meant we didn’t have to spend a lot of time editing it,’ says Maggie O’Donnell, director of investor relations at Wix.com and co-winner of the rising star award at this year’s IR Magazine Awards – US. ‘It made our lives a lot easier and saved almost $10,000 for the company.’ Wix.com had 75 in-person attendees at the event in New York and hundreds of people tuning in to the livestream. As of September 2019, the video has had almost 1,000 views.
Given that livestreaming also increases the likelihood that members of the international investment community tune in, Pohl has a practical suggestion for IR teams.
‘Most German companies are now offering their webcasts in German and English – it’s easy to offer translations,’ she says. ‘Maybe if you’re doing the event in English but you have a big stakeholder in Asia, it makes sense to have simultaneous translation.’
A view from above Honeywell made waves with its investor and analyst day in 2017, ultimately winning the award for best investor event at the IR Magazine Awards – US 2018 and being short-listed for best IR during a corporate transaction at this year’s awards. Investors were taking a close look at Honeywell’s aerospace business at the end of 2016, following worse-than-expected results and a letter from an activist investor proposing the sale of the business.
Speaking to IR Magazine after picking up the best investor event trophy, Mark Macaluso, vice president of investor relations at Honeywell, said: ‘There was a lot of concern around [the aerospace business] losing market share. We thought we’d get ahead of it and tell our story proactively. We hosted our analyst day in our hangar, and really tried to own the messaging. We told everyone what we were seeing and explained why some of the bear theses were incorrect.’
The company invited its top 50 investors and analysts to the day, and also livestreamed the event online. One of the key messages Honeywell wanted to communicate was how effective its new in-flight wifi was. The IR team was allowed to use the firm's Gulfstream G650 jet, in which it took more than 40 analysts on test flights where they were encouraged to test out the wifi by Facetiming people on the ground.
When it came to measuring the success of the event, Macaluso says, ‘First and foremost we looked at the notes that were written coming out of the event, which were pretty positive. We looked at the message we wanted to convey and then we spoke to a lot of the top owners about it.
'Slowly but surely we took control of the message again.’
Signing off a large merger For Bharti Infratel, a telecom tower company based in India, a capital markets day was necessary to build support behind a proposed merger with competitor Indus Towers – a deal that, as of September 2019, has yet to be completed but will create the world’s second-largest telecom tower company if it does go through. Investors were concerned about the pressure that telecom tower companies have been facing in India, but the way the company responded led to it being short-listed in the best investor meetings category at the IR Magazine Awards – India 2019.
The company had never hosted a capital markets day, but the IR team knew that needed to change. Investors had almost voted against proposals related to the Indus Towers transaction (the proposal finally squeaked through with 52 percent of votes in favor of management) at the 2017 AGM.
‘Our objective was twofold: one, to understand key issues and provide senior management and the board with feedback [on] key pushbacks from investors, and two, to take that feedback and clarify our response to each of those concerns,’ the IR team wrote in its submission for the India Awards.
Bharti Infratel developed detailed presentations enhanced with graphics and charts that, in a rare move for an Indian firm, differed from the formal language of the transaction documents to explain why the deal was in the interest of investors. The award submission notes that the IR team received positive verbal feedback at the analyst day about the quality of the presentations. But the proof was ultimately in the pudding: when the full merger was the subject of a shareholder vote at the next AGM, it received 97 percent support.
Honeywell’s Mark Macaluso accepts the best investor event gong at the IR Magazine Awards – US 2018
Maggie O’Donnell of Wix.com collects her rising star trophy at the IR Magazine Awards – US 2019