Posted on March 5th, 2014. Posted by ICR Westwicke
This time of year, Wall Street is abuzz with opportunities to meet, greet, and hear firsthand from you and your management team about what’s happening with your company. There are requests to “go on the road” with virtually every sell-side firm, whether an analyst from the firm covers your company or not. There are also countless investor conferences, bus trips, and industry events — all of which you will be asked to participate in.
The buy side values access to the C-suite probably more than anything else. In fact, many of the major investment firms base the commission they pay brokers on how many management teams they provide access to each quarter. A great deal of money is tied up in these events, so they are important.
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Posted on January 29th, 2014. Posted by ICR Westwicke
2013 was an incredible year for the United States initial public offering (IPO) market — the best since 2000. Of the 222 companies that went public, a record 55 companies (or 24.7 percent) were from healthcare, which experienced more IPOs than any other sector. Will healthcare break the 55 IPOs record in 2014? Time will tell.
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Posted on December 5th, 2013. Posted by ICR Westwicke
Not long ago, I had the enjoyable task of serving as moderator for the recent evening program of the San Diego National Investor Relations Institute (NIRI) Chapter titled “Do’s and Don’ts from the Buy Side and Sell Side.” The panel of two buy-side investors and two sell-side analysts, who cover the technology and life sciences sectors, provided a lively discussion and an abundance of practical advice on the art of practicing effective investor relations (IR). We touched on just about every aspect of IR, from non-deal road shows to the corporate website, and even the perfect length of time for the safe harbor statement on a conference call. Here are some of what the panel considered the top do’s and don’ts for investor relations.
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Posted on November 13th, 2013. Posted by ICR Westwicke
Hiring an investor relations (IR) firm isn’t easy because it’s not a simple decision. A tremendous amount rides on the relationship you are able to cultivate with investors and shareholders, so you need total trust and confidence in your IR partner.
Making the choice more difficult is that IR consulting firms vary widely, and what gets promised up front doesn’t always hold true. The spectrum ranges from firms that offer IR as one of many services to those that specialize only in IR. While it might seem reasonable to just pick one and get to work, the reality is that the relationship you build with investors and Wall Street represents a core part of your business strategy with a real impact on your perception in the markets.
How can you choose wisely? Finding the right fit takes time and research. IR firms aren’t one-size-fits-all, and the right choice requires you to stop and ask some hard questions, starting with these essential eight.
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Posted on October 10th, 2013. Posted by ICR Westwicke
“Why is there so much short interest in my stock?” Many executives find themselves asking this question, especially when it seems things are going well. Stocks have been “shorted” for many years now, but there is no doubt that the practice has seen much wider use – and brought about more management frustration – in recent years. Doesn’t short selling expose funds to unlimited losses? Why do investors take the risk?
Much like with negative analysts, the most tempting answer – and biggest misconception – is to believe it is personal. It might be true that your short investors don’t like you. But that is not the reason they put in that short order.
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Posted on September 27th, 2013. Posted by ICR Westwicke
Sell-side analysts hold big sway with the investment community, and can help your company’s potential to attract investors. To work in your favor, analysts must know the ins and outs of why your company or product represents the next best thing in the marketplace. They also need confidence in your company’s potential to make it to the next level.
While the reputation of sell-side analysts came under fire with conflict of interest stories this past decade, and new regulations helped level the playing field, analysts continue to play powerful roles in the marketplace, and companies are wise to nurture strong relationships. What’s it like in today’s market from the sell-side point of view? And how can you better your chances of making it on analysts’ coverage lists and receiving a coveted “Buy” rating? Continue Reading
Posted on August 21st, 2013. Posted by ICR Westwicke
Over the last decade, various regulatory adjustments have dramatically changed the buy-side/sell-side scenario and how companies interact with both sides of The Street. In 2000, the SEC adopted Regulation FD, which aims to promote the full and fair disclosure of information by publicly traded companies. Two years later, Sarbanes-Oxley mandated reforms to enhance corporate transparency and reduce conflicts of interest among securities analysts. Crucially, today, management teams need to provide the same information to both sell- and buy-side analysts.
The following are a few tips to help you better manage your analyst relationships:
- Keep the talking points consistent between the sell-side and buy-side analysts. Regulation FD mandates that you treat both sides equally. Be straightforward, transparent and candid with both. Shareholders that receive different information from the analysts will take this as a red flag.
- Appreciate the nuances between buy- and sell-side analysts. It’s important to understand that buy- and sell-side analysts have different jobs and play different roles. For instance, the sell-side analyst needs to have a price target over the next year. The buy-side analyst may create a target price over the next three years. As a result, each may interpret the exact same information differently. Continue Reading
Posted on August 1st, 2013. Posted by ICR Westwicke
All public companies face the challenges of helping the investment community understand their business—how they’ll grow, how fast they’ll grow, what investments are required, and what kind of volatility there may be in their financial results. Those companies that can effectively communicate how they will grow, and then execute predictably, have the greatest potential to earn higher-than-average valuations over the long term.
The practice of providing financial guidance is a powerful tool for helping the market realistically frame its expectations for your performance, as well as for decreasing the likelihood that your actual results will miss the Street’s expectations in the near term. And indeed, according to IR Magazine, 68 percent of companies worldwide provide earnings guidance to investors at some point during the year, to create greater transparency for their shareholders and analysts.
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Posted on July 24th, 2013. Posted by ICR Westwicke
Many factors — inside and outside your company, even outside your industry — affect how investors perceive you. Some would argue there is no such thing as a misperception; in other words, whatever investors think about your company is your reality.
But perceptions can change. If the prevailing perception is not what your management team wants it to be, there are ways to alter the perspective to be more in line with how you want to be viewed. While the efficient market hypothesis states that share prices reflect all publicly available information, investor expectations about future earnings and profitability are imbedded in today’s stock price. Shaping perceptions about the future is an important goal of successful investor relations.
Stepping outside your company to see how others view it is an essential part of perception building. Assessing how outsiders respond to the following basic questions is a good place to start:
- What does the company do?
- Who are its customers?
- How much risk is there in bringing the company’s new products to market?
- What/who is the competition?
- Does management instill and exude confidence?
- What is management’s track record?
- What do bloggers and others involved in the social media sphere say about the company?
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Posted on July 10th, 2013. Posted by ICR Westwicke
Whether notification comes from an open filing with the SEC, a private letter or an inbound call, the mere presence of an activist investor or fund in a company’s stock is enough to put even the most stalwart management team on edge. In recent years, the growth of specialty and hedge funds has led to a dramatic increase in shareholder activism, which has brought both problems and benefits to investors and managements.
One important point to keep in mind when dealing with activists is that despite their loud voices, activist shareholders’ opinions should not outweigh those of other shareholders. That said, as shareholders, activists’ opinions are important and can be very helpful if approached with an open mind, as most activists seek increases in a company’s share price just as management teams do.
However, interests often diverge with the time frames and methods each would like to see. Activists often seek to unlock existing value as rapidly as possible, often through reorganization and austerity, while management teams often take a longer-term view that focuses on investment and franchise expansion. Depending on the specific case, either approach could be the best path for shareholders as a whole.
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