IR don’ts from the buy side
At the end of a buy-side Q&A at the Global Forum in Paris, the panel – made up of Kirsty Collins, global responsible investment at Aviva Investors and former IR director at GlaxoSmithKline, Nicholas Melhuish, head of global equities at Amundi, and Marc St John Webb, partner and fund manager at Quaero Capital – were asked to share a few of their IR pet peeves…
Kirsty Collins: With my limited experience being on the other side of the table, one [peeve] is that I haven’t seen as much IR as I thought I would have. Companies aren’t necessarily coming to engage – so that’s one. Some of the engagement comes through the company secretary but I think IR should own most of it, or at least look like it’s joined up. That’s the second peeve – if they do come, it’s not joined up.
I have a good story – the company will remain nameless – where the chairman and the company secretary came out of a meeting with an investor while the CEO and IR were about to go in and the [first pair] had no idea the [other two] were there. Really big company, so not great!
And my third is probably my pet peeve around ESG. I think ESG scares IROs so they think, ‘I’ll just give that to the sustainability people and they’ll deal with it’. But I think, increasingly, IROs need to get their hands around it. You don’t need to know it all, you don’t need to become a carbon-footprinting expert – I’d recommend that you don’t. But you’ve got to better understand the dynamics within the investment community and [IROs] are best placed to understand that and how it all fits together – not the sustainability people, because they don’t see how the rest of it works. So that’s a huge value-add you could bring to the business.
Marc St John Webb: I have two pet hates. One is that, certainly in smaller companies, a lot of company IROs or management, when they’re talking about their businesses, we’d like them to be a bit more transparent. We want to understand where the profitability is coming from and where it’s not coming from.
Two is that where I think IR really comes into importance is in times of trouble. When a company has to publish results that are poor and there’s not a natural macroeconomic explanation, where it’s an internal company explanation, we tend to find that companies are not explaining in simple-enough terms what went wrong. It’s often a series of excuses that’s hiding the real root cause of the problem and we’d love the IRO to help us with that.
If we see what’s happening with Mifid and less coverage from some of the brokers, it’s going to mean some companies won’t have a local Paris small-cap broker, for example, commenting on these first-half figures and explaining through his/her knowledge of the company what actually happened. So the job is going to fall on IR to explain very clearly to the investment community what happened and we would prefer to have a frank explanation rather than having to look below the surface to actually understand the situation.
Nicholas Melhuish: One of my bugbears is what I call the ‘thin gruel narrative’ that people just can’t get [away from], where the IRO for whatever reason has a complete inability to really give you any context or depth in the narrative he/she has – though to be honest that doesn’t happen very often. That’s maybe a problem more from 10 years or 15 years ago when IR was more in its infancy than it is today.
The other thing that really frustrates me… I understand that as an IRO you’re employed by the company, you’re working for the senior management and you’re an intermediary between us and them and therefore you get caught between different sets of priorities we often can’t see – but when access really feels like it’s just being blocked for whatever reason, it can be incredibly frustrating.
I think the best relationships are with companies where you can have frequent interaction and also where you can get to know different people within the business – whether that’s up to the board or down to operational management – which can often give you that eureka moment where you actually begin to understand what makes a company work culturally and from a business perspective.
The third thing I really hate – and I’m thinking of a particular company I’m invested in – is the lack of answering of any kind of emails and then always offering a conference call at 7.00 pm UK time on a Friday evening!