US companies’ face-to-face investor engagement rises sharply
Companies in the US have increased face-to-face contact with investors by 26 percent in year-on-year numbers across 2017, according to Wall Street Horizon.
Barry Star, founder and CEO of the earnings calendar and events data provider, tells Corporate Secretary sister publication IR Magazine that although the firm doesn’t want to reveal specific numbers, the areas that have seen the largest growth since 2015 are analyst and investor days. Wall Street Horizon also reports a 23 percent year-on-year increase from 2015 to 2016.
There are a number of drivers behind the overall growth, adds Star. ‘The increase in direct investor meetings is being driven principally by three factors,’ he explains. ‘IROs having more desire to talk to investors directly and control the corporate message, the pressures on the sell side to reduce costs (and reduce their activity as middlemen), and the reduced cost and better availability of technology.’
The data mirrors trends picked up by IR Magazine in 2016, when a survey of 665 IR professionals found that almost half (49 percent) had increased their level of direct targeting in the previous three years. A further 49 percent said levels had remained the same, while just 2 percent said they had reduced activity in this area, according to the report Direct targeting: What’s changed?
On the topic of direct contact with investors, Andrew Kramer, vice president of investor relations at Netscout, tells IR Magazine: ‘IR needs to own the direct relationship with the institutional shareholder. We have a lot of dialogue with investors that is not facilitated by sell-side analysts. While I leverage the sell side to attend its conferences and support non-deal roadshows, I view the sell side as a conduit to the buy side.’
And although Mifid II might be a European directive, Kramer adds that the ‘initial impact of [the regulation] may dampen the use of the sell side to support non-deal roadshows by US-based publicly traded companies.’
Direct targeting is also being made easier as the technology behind targeting tools evolves. ‘Targeting, even at a relatively simple, peer-based level requires the use of online tools,’ says Kramer. ‘Those tools are becoming increasingly sophisticated to help IROs integrate various quantitative models that are designed to assess the appeal of your company and its various financial and investment valuation metrics against the holdings at targeted firms and their funds.’
Two firms offering algorithm-backed targeting tools include Intro-act, which moved its artificial intelligence (AI) targeting offering from alpha to beta at the start of the year, and Q4, which is setting up to launch its own AI targeting tool at NIRI’s annual conference in June.