Investor relations teams work hard to organize and host events that allow buy- and sell-side analysts to meet the men and women involved in running the companies these researchers cover. Typically, these proceedings range from a few hours to a full day and involve presentations from upper-management teams, with time allocated for question-and-answer sessions, lunch and networking breaks. Some companies even give tours of their offices or manufacturing plants.
The key to an effective analyst day is a solid understanding of what kind of information attendees want and a commitment to delivering a high quality rather than a vast quantity of data, according to Kay Bommer, chief executive officer of Deutscher Investor Relations Kreis, or DIRK, a German IR association. He urges companies to move away from regurgitating quarterly reports and financial minutiae in favor of a big-picture look at long-term strategy.
Which European companies do the best job of hosting the kind of event that financial professionals find most helpful? To find out, Institutional Investor asked participants in the 2015 All-Europe Executive Team, our exclusive annual ranking of the region’s best corporate leaders and investor outreach programs, to identify the companies in their domains that offer the most constructive analyst days. We received responses from nearly 1,380 individuals at some 500 financial services firms. Roughly 70 percent of the people who cast votes in the executive team survey, representing approximately 77 percent of the participating institutions, answered our question about analyst days. Respondents from the buy side work at firms that collectively manage some $4.5 trillion in European equities.
Click on Leading Companies in the navigation table at right to view the winners in each of the survey’s 30 industry sectors that produced publishable results. There you will also find a brief profile of the companies in first, second and third places, plus information about each one’s next capital markets day, where applicable.
Jan Strecker, head of IR at Germany’s Deutsche Börse, which captures top honors in the Specialty & Other Finance sector, agrees that companies should focus on quality rather than quantity. “If people are going to sit there for five hours, they don’t want to only hear things they already know,” he says, emphasizing that this is not a platform for breaking news but, instead, for weaving a compelling story line with new and interesting details that give insight into the business and underpin why investors should invest.
Strecker’s team is doing just that, advocates say. “The event provides an opportunity to understand the business drivers in considerably more detail than is possible in the usual quarterly results updates,” observes one buy-side supporter. “Given the complexity of the group — equity venue, index provider, derivatives exchange, clearinghouse, custodian — it’s also very helpful to see the divisional heads present.”
Analysts shouldn’t be the only ones taking notes, as company representatives can gather important information as well. “Being a consultant of the CEO is a role of IR that is becoming increasingly important, and I believe a good CEO listens to IR,” DIRK’s Bommer explains. He says IR professionals need to listen to the questions asked in Q&A sessions and leave enough time in the day to get feedback about the company from attendees. Then they need to take this information back to the board and C-suite and inform the executives of what the capital markets expect.
Kimberly Stewart, head of IR at the No. 1 company in Oil Services, France’s Technip, has the experience to know what asset managers and sell-side researchers expect — she spent seven years as an equity analyst at Paine Webber, Credit Suisse and Cheuvreux before joining Technip in 2008. “This is an opportunity for the investment community to look under the hood — or the bonnet, as they say in London — and see who’s running the company, not just the CEO or CFO,” says Stewart.
Technip’s most recent Technology Day, held in November 2013 in Los Angeles, drew nearly 1,000 participants. The company’s events usually last for about three quarters of a day and kick off with a dinner on the preceding evening. Tech exhibits, featuring models and pieces of equipment accompanied by expert demonstrations, lend a “science fair” feel to the festivities, she notes. After lunch guests may be taken to visit one of the company’s pipe manufacturing plants.
“What’s most interesting at Technip’s [capital markets day] is the depth to which they help analysts delve into a particular aspect of their business,” reports one attendee. “That was the case both at their 2013 event in Los Angeles and 2011 event in Brazil. They also organize quite efficient sell-side meetings on each quarterly publication, where top management and analysts can sit down for one hour around a table for an open Q&A session.”
Diego Morón, senior equity IR manager for Spain’s Iberdrola, the top-ranked host in the Utilities sector, highlights the need to balance the discussion topics between the present and future — the next three to five years of the company — and dive into financial performance, projections, growth targets, capital-expenditure allocations and leverage, among other considerations.
“Everything fails if you don’t give them what they’re expecting, and what they expect is information to help them value the company,” Morón explains. “If you give them good, reliable, transparent information, everybody is happy.”
Analysts agree. “They did good work to make the market understand the change of Iberdrola from a difficult period with balance-sheet problems and regulatory cuts to a new period with a strong focus on regulated businesses,” recalls one researcher who attended Iberdrola’s most recent investor day, held in London in February.
Location is an important factor. When Deutsche Börse changed its venue from Frankfurt to London last year, participation surged by 20 to 30 percent, Strecker reports. Many of the new attendees were from the buy side, he adds.
For U.K.-based money managers, analyst days may become increasingly important since the Financial Conduct Authority passed regulations in May that prohibit the buy-side firms it oversees from using dealing commissions to finance corporate access services provided by brokerages.
Although she hasn’t yet seen any change in attendance in response to the new regulations, Technip’s Stewart notes that more asset managers have started reaching out to her office directly to arrange visits in so-called reverse road shows, where buy-siders travel to meet with company executives rather than the other way around.
Bommer urges DIRK’s member companies to be more aggressive in arranging their own events and meetings with investors in light of the new regulations. Because brokerages may not get paid as much for providing corporate access, he encourages small and midsize companies that may be overlooked to engage with money managers directly. This is an opportunity for companies to meet with a more targeted selection of investors, as brokerage houses may not always gather the best audience for a given company, he believes.
