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ICR Westwicke Blog

The ICR Westwicke Blog is designed to deliver information and insights into the ever-changing world of healthcare communications.

Another Chance to Test Your Reg FD Knowledge and Compliance

Posted on May 1st, 2013. Posted by

Another Chance to Test Your Reg FD Knowledge and Compliance

Last week, we wrote about Regulation FD, now in its 13th year of implementation, and offered Part One of a quiz designed to test how well you understand the regulation. Here, we offer a slightly more challenging Part Two of the quiz. We hope you will find this helpful as you think about real life Reg FD situations. Since the following answers should not be construed as legal advice, we also urge you to talk with your legal counsel before deciding what practices are best for your company and its particular disclosure situations.

Good luck!

Reg FD Quiz, Part Two- Violation or Not?

1.  CEO is aware that your company will likely miss quarter consensus estimates, but this hasn’t been disclosed. CEO looks downtrodden in 1×1 meeting, and talks about what a tough macro environment it has been for the industry. A week later, your company announces lower than expected revenues. Stock trades down sharply on higher than normal volume.

Did the CEO violate Reg FD? (YES) The CEO selectively disclosed material, non-public information through non-verbal cues. Hindsight is perfect; hold a poker face or don’t talk.

2.  At a webcasted analyst day, management outlines its new product pipeline, how the products compare to existing technologies and treatments and the timeline for product launches. Two weeks later, in a 1×1 meeting with an investor who missed the analyst meeting, management answers questions about how some of the new products differ from competition.

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Test Your Reg FD Knowledge and Compliance

Posted on April 24th, 2013. Posted by

Test Your Reg FD Knowledge and Compliance

Regulation FD, now in its 13th year of implementation, remains a source of consternation for senior management and investor relations teams in their communications with investors. Some companies err on the side of excessive caution and end up rarely engaging in regular, productive dialog with The Street. Other companies go the other extreme and provide copious amounts of detail while filing an abundance of 8Ks. Finding the appropriate balance is the best strategy for open, useful relationships with investor audiences while steering clear of actions that could lead to SEC penalties.

Here, we offer a brief description of what Reg FD is, followed by a simple test to help you determine your level of compliance with the regulation. We hope you will find this helpful as a starting point as you think about Reg FD. Since the following answers should not be construed as legal advice, we also urge you to talk with your legal counsel before deciding what practices are best for your company and its particular disclosure situations.

What is Reg FD?

Reg FD is the SEC’s attempt to level the playing field for all investors – institutional and individual ­– by prohibiting selective disclosure of material information.

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Top 10 Reasons Why It’s OK to Meet with Hedge Funds

Posted on April 17th, 2013. Posted by

Top 10 Reasons It's OK to Meet with Hedge Funds

Some management teams are reluctant to meet with hedge fund managers. While planning a road show or conference appearance, they try to meet with “long only” fund managers. While I can understand that management teams are reluctant to meet with hedge fund managers out of fear of a tense line of questioning or some form of brow beating during the meeting, the reality is that you can’t (and shouldn’t) avoid these meetings. The sheer number of hedge funds is staggering and almost $2 trillion dollars are under management within these funds.

Following are the top ten positive reasons management teams and IR professionals should keep hedge funds on the schedule:

  1. Don’t judge the book by its cover. Hedge funds come in a variety of flavors. Funds can differentiate themselves by investment style, sector focus, geography, market cap, market neutral, long/short, etc. You may even be surprised to learn that some hedge funds are long-only or exclusively long-term oriented.
  2. Despite their depiction by the popular press, not all hedge fund managers are “bad guys.” Many hedge fund managers are smart, considerate, thoughtful, long-term investors. Don’t let the structure of their fund dictate if you meet with them. Continue Reading

The SEC Has Opened the Social Media Door; Should You Walk Through?

Posted on April 10th, 2013. Posted by

Should You Walk through SEC’s Opening Door for IR Social Media Use?

On April 2, 2013, the Securities and Exchange Commission (SEC) issued a report that outlines how companies can use social media outlets to disclose information and remain in compliance with Regulation FD. The report was the result of the SEC’s investigation of statements made on Facebook and Twitter by Netflix CEO Reed Hastings, where he announced a “viewing” milestone for his online movie and TV rental company. While the investigation centered on whether Hastings violated Regulation FD, Hastings has maintained that his disclosures were neither material, nor exclusive.

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Negative Analysts: 3 Strategic Steps For Managing Them

Posted on April 3rd, 2013. Posted by

Negative Analysts: 3 Strategic Steps For Managing Them

Sell ratings got you bothered? Can’t shake the feeling that an analyst is holding a grudge? Wish you could just make them go away?

Let’s discuss your negative analyst strategy in 3 steps:

 

  1. Remember the big picture
  2. Avoid the pitfalls
  3. Engage and execute

1. Remember the big picture.

There will always be analysts who are negative on your company. They won’t go away. Why?

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Handling Negative Financial Results

Posted on March 27th, 2013. Posted by

Make a Hit from That Miss—Handling Negative Financial Results

A “miss” relative to a company’s financial guidance can happen to even the best management teams. Misses can arise from a hiccup in company operations or they can be related to factors outside your company’s control. In either case, the ways in which you assess the problem, communicate it, and follow up in later quarters will have a powerful and lasting impact on the Street’s views of management’s credibility and thus your stock’s long-term valuation.

Assessing the problem

Before you communicate with the Street, make sure you’ve honestly assessed the reason for the miss and its ongoing impact to your results. Was this merely a soft quarter for seasonal or other factors, or was there a one-time event? While it’s possible that ongoing results won’t be impacted, it’s also possible that greater forces are at play: a business segment could be maturing, or your internal growth expectations may have to be moderated. Even if the miss is truly related to an issue out of your control, such as a reimbursement change, make sure you critically evaluate the impact before you communicate any revised guidance.

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Too Many IR Conference Invitations? It’s OK To “Just Say No”

Posted on March 20th, 2013. Posted by

Too Many IR Conference Invitations? It’s OK To “Just Say No”

If it seems to you that there is an investment banking conference every week, you’re just about right. Investment banks routinely hold investor conferences that tend to focus on certain industries (like healthcare or technology). A few Wall Street firms also hold what I’d call “best idea” conferences, which include representative companies from different industries.

Attending a conference can be a valuable part of your investor relations strategy. It’s a great way to get more investors to know your company, and to make vital business connections. But, if you have, say, 15 analysts covering your stock, and each one hosts a conference, that can mean you’re getting invited to 15+ conferences a year. How can you possibly accept every one of these invitations?

Before deciding “yea” or “nay” on attending upcoming conferences, it’s important to understand why they’re held. Decades ago, Wall Street’s equity divisions made money primarily by underwriting stock offerings and trading stocks. As institutional commissions have shrunk, trading has become much less profitable. However, while the buy side is no longer paying as much for trading execution or research services, buy side firms and analysts will pay for access to management. Therefore, Wall Street has strong incentives to arrange venues where they can introduce companies to investors.

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Top 10 Reasons Why Portfolio Managers Sell Your Stock

Posted on March 13th, 2013. Posted by

Top 10 Reasons Why Portfolio Managers Sell Your Stock

Our clients often ask, “Why did account X sell my stock? Our last meeting with them went so well.” Generally speaking, there is one reason investors buy a stock: the assumption that its price is going up. There are, however, countless reasons why stocks are sold.  Sometimes when a company’s fundamentals seem to be improving it’s not always clear why a portfolio manager might sell a particular stock.  We want to shed some light on the factors that can lead to the “sell” decision via this month’s Top 10 list.

  1. Locking in gains. No one has ever been fired for locking in gains. Even an investor who’s held your stock for years can’t be faulted for taking some money off the table.
  2. Macro concerns or sector rotation. Even for a company that derives zero revenue from Europe and does not sell directly to the federal government, events like foreign debt defaults and sequestration cause fund managers to lighten up on stocks.  In uncertain times, cash is king!  Similarly, depending on the outlook of the firms’ economist, portfolio managers shift money between sectors, increasing and decreasing their exposure based on the economists’ suggestions. If healthcare is deemed an underperforming sector at a particular time, your stock might be caught in the sector rotation. Continue Reading

Good Benchmarking Starts with the Right Index

Posted on March 6th, 2013. Posted by

Good Benchmarking Starts with the Right Index

All management teams and boards of directors want to know how they’re doing. For public healthcare companies, the wide variety of stock indices makes it easy to draw a comparison with peer companies. But finding the right index is key to making a meaningful comparison. Just because an index includes “technology,” “healthcare” or “mid-cap” in its name doesn’t mean it’s right for you. And the most popular indices are not always the right choices.

Fund managers, especially those who may not understand nuances in various healthcare sectors, will use an index to evaluate your firm’s performance. But, comparing against the wrong index can have serious implications:  for instance, if an index that includes many larger cap companies (over $1 billion in market capitalization) is rising, but smaller companies aren’t sharing this momentum, then your smaller firm will compare poorly against the index – and undeservedly so.  Further, smaller companies are more vulnerable to certain financial issues than multi-billion dollar firms; access to capital, product pipelines and market volatility can have an outsized effect on a small-cap firm’s stock performance.

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When It Comes To Your Bank’s Sales Team: Experience Matters

Posted on February 28th, 2013. Posted by

When It Comes To Your Bank’s Sales Team: Experience Matters

As CEOs and CFOs, you no doubt think long and hard about the investment bank with which you want to work.  Most management teams consider which investment bankers can best help meet their company’s capital raising and strategic needs, as well as which bank’s sell-side analysts will provide quality research coverage of the company. However, it is also important to consider how impactful the bank’s institutional equity sales force is.

Whether you are already public or thinking of going public, you want to work with a sales force that has real influence in the investment community. Importantly, you want to engage a team that has solid, long-term relationships with those investors who will be buying your stock.

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Learn to Foster Better Analyst Relationships

Analyst communications play a key role in a company’s success. Download our checklist, 5 Tips for Effective Analyst Communications, for tips to maintain effective analyst relationships. 

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