The excitement in the air is palpable
In a Manhattan hotel or sunny resort, amid the rustle of linen and clank of cutlery, IROs juggle slide carousels and fiddle with laptop computers. CEOs stand by, cool or nervous as the case may be, scanning the crowd for potential new investors. Meanwhile, fund managers wander around in relaxed anticipation, carefully surveying the scene. Finally, the lights are dimmed, and for a brief 30 minutes, the spotlight is turned on a single company among dozens or even hundreds of competitors. This is the multi-company investor conference, the starting line in the global race for capital, and the ultimate test for any IRO. By Neil Stewart
Melding showmanship with solid financial communications, companies presenting at investor conferences have to get their message across quickly, clearly and in a sufficiently interesting fashion to capture the wavering attention of investors.
Nearly all the investment banks and brokerage houses hold regular conferences that serve to showcase their underwriting and analysis strengths. Merrill Lynch's banking conference, PaineWebber's media conference, and Hambrecht & Quist's technology conference are all examples of calendar highlights which help to show off the sectors in which these firms are particularly strong. These spotlight conferences attract the cream of the investor crop, as well as leading companies. But there is another strand of emerging growth conferences, ideal for smaller cap companies, emerging markets players, and newly-listed IPOs.
'Investor conferences have become a critical tool for reaching the broadest possible audience,' comments Anne McBride of New York-based Anne McBride Company. 'Conferences sponsored by securities firms attract a credible and focused group of senior fund managers. Also, presenting next to one's industry peers is a healthy way of portraying a company, providing all investors with relative and absolute measures of valuation.'
Broker-sponsored investor conferences usually follow a standard model, featuring panel discussions and individual company presentations before an audience of the firm's key institutional clients. Most of these conferences require that company delegations include the CEO, and some offer special 'break-out' sessions which let companies meet face-to-face with interested investors after their presentation. These results-oriented conferences demand that a company make the effort to show-off management talent, but performance is often rewarded on the investor rolls.
Not that the growing legion of professionally run non-broker conferences do not do the trick. These non-aligned conferences often follow a similar pattern to their broker counterparts. The events are put on by a range of industry-sponsored groups, such as the mammoth American Electronics Association conference held annually in October in Monterrey, California. Also similar to broker-events are conferences which companies pay to attend, such as those held by the New York Society of Securities Analysts (NYSSA) or the Wall Street Forum.
Many IR consultants recommend a conference a quarter for those companies with a strong story to tell; any more than that may be a waste of time and effort. 'It's good to do a conference with a specific purpose, whether it is discussing financial earnings or sharing other information with the marketplace,' comments McBride. 'Sometimes emerging markets companies eager for attention will go to every conference conceivable. That is what we call overreaching, usually at the expense of properly managing the company.'
One IRO cautions that investor conferences are just one venue out of several, and should not dominate an entire investor relations programme. 'Broker-sponsored investor conferences are thought-starters and seed-planters,' states Jay Gould, senior vice president and director of IR at Key Corp. 'It is hard to differentiate the company in a short presentation among so many other stars, but a brief overview can catch the interest of an investor who will then take the time to follow up with a later discussion.'
Gould limits Key Corp's conference appearances to four or five a year, concentrating on the biggest events: bank conferences held by CS First Boston, Merrill Lynch, Salomon Brothers and Goldman Sachs. In addition, Gould and his chief executive officer target other investor pools with appearances at conferences held by regional brokerages like Minneapolis-based Piper Jaffray. 'We plan far ahead,' Gould says. 'With a brief time slot we make our presentations stand out with short videos and photos.' Gould adds that while some IROs enjoy sharing the CEO's spotlight, he prefers to stay behind the scenes and ensure that the presentation flows smoothly.
Johnnie Johnson, chairman and CEO of Johnnie D Johnson & Co in New York, agrees that conferences should be chosen carefully. 'An IRO should look at the next twelve months and decide how much time the CEO and CFO can afford to commit to such events,' he argues. 'With a firm schedule, shareholders and targeted investors can be notified well ahead of time.'
As a starting point, Johnson recommends conferences sponsored by securities firms with the industry specific expertise needed to draw the right kind of investor. Conferences held by a company's investment bankers are a logical choice, as well as any event organised by analysts covering the stock.
Johnson advises a targeted approach to conferences. 'Of all the portfolio managers a company is trying to reach, each brokerage firm has only a small share of them as their clients,' Johnson says. 'If a portfolio manager does not use a certain brokerage firm, he won't show up to their conference. Sometimes industry-sponsored conferences with analysts from a number of sell-side firms are more appropriate for getting across a message to a broader base of investors.'
When it comes to designing a presentation, most investor relations consultants recommend a tightly focused discussion of what makes the company unique, a highlight on financial characteristics and benchmarks that let analysts value and judge a company's success and future growth strategy. The US capital market is the most competitive in the world and out of 25,000 US-listed companies, perhaps 1,000 get the research coverage they deserve or desire. Standing out in a crowd is what may make the difference between coverage and correct valuation - or a spot on the sidelines.
Given these stakes, a lack of preparation for a conference is certainly a wasted opportunity, and may leave investors with a negative perception. That's why, a choice presentation makes all the difference.
At a minimum, a company should bring 35mm slides and video where possible. McBride says that computer-based presentations are an excellent vehicle. And she believes that a paper copy of the presentation should always be handed out to the audience - preferably at the beginning, rather than the end. 'Fund managers appreciate hard copy, and it does not mean they pay less attention,' she says. 'It makes it easier to follow the presentation and to take notes.'
Johnson's approach is to give the audience a hard copy of the slide presentation along with a four to six page overview of the company. The overview should focus on the company's market position, strategy, prospects and financial data. Such a document is more timely than an annual report, Johnson believes, though a stack of annual reports should also be on hand for people unfamiliar with the company.
Whatever the selection of material, it should concentrate on focusing the investor's attention on the potential and on the investment opportunity open to them.
In the following pages, Investor Relations magazine looks at some of the leading conferences and how they help companies bring their IR message to the fore in a crowded and selective market.
Conference Pioneer
Some broker conferences seem to be able to stand the test of time, enduring investor scrutiny year after year. PaineWebber's annual media conference is one such perennial favourite. This event, the grand-daddy of all investor conferences, will mark its 24th anniversary in December of this year. The PaineWebber conference has evolved beyond traditional media investments to encompass rising-star Internet companies, pioneer cable TV operators and the new generation of satellite providers.
Christopher Dixon, managing director of research and media analysis at PaineWebber, remarks that the media and entertainment industries need investor conferences to help explain the furious pace of mergers and acquisitions activity and the multitude of capital raisings. 'The main purpose of a conference should be to minimise surprises for investors,' Dixon says. 'Conferences are an important part of an ongoing investor relations programme, affirming a company's support by the investment community to help in dealing with banks, potential lenders and regulatory agencies.'
Timing is important, notes Dixon, and the December conference offers management a strong platform to offer an indication of the year's financial results and an overview for the coming year.
PaineWebber's media conference incorporates two different kinds of presentation. For a small, inexperienced company, new to the IR world, Dixon suggests an industry panel-style presentation. The panel might incorporate an operating officer from a magazine, the chairman of a private printing firm and a CFO from a major paper company; and it provides a good way of extending a small company's reach to the investment community, or for management from larger companies to gain experience in presenting.
The second model used with success in the PaineWebber event is a basic IR presentation, which should be no more than an hour long and should include a brief strategy statement by the CEO, an operating summary from the president, a financial overview by the CFO, and finally a Q&A session. 'Investors want a sense of the strategy as it relates to competition, regulatory issues and economic conditions,' says Dixon.
PaineWebber is unique on Wall Street for inviting analysts from other sell-side firms to attend its media conference - albeit for a fee. Dixon says that this raises the level of dialogue with the companies, and improves overall investor interest in the conference, which is now widely known on the Street as Media Week. To allow for further dissemination of information, journalists are invited to attend the proceedings and can arrange individual interviews with companies.
Given the array of technological pioneers at PaineWebber's media conference, it is no wonder the event has seen dazzling presentations. Often the technology is more than the means to convey the message: it is the message; especially for Internet companies and satellite providers. Dixon recalls News Corp's used a live link to Australia, bounced off several satellites and microwaved off the Empire State Building, to demonstrate the group's ability to span the globe. When the conference screen flickered to life, it showed a Sydney-based executive using an overhead projector to make a presentation: an ironic case of high-tech meets low-tech.
Measuring Up to Merrill
Merrill Lynch investor conferences are usually the top-draw extravaganza of Wall Street. Few brokerage houses can muster the legions of investors that trade with Merrill, or the sizeable flock of investment banking clients eager to take the stage at some of the biggest conferences around. Mind you, those intrepid companies risk being buried under a heap of competitors; and they certainly have to work harder than ever to differentiate themselves from the pack.
Merrill's September banking and financial services conference in New York, an industry benchmark for five years, puts some 50 companies in front of 600 investors over three days. Not just a bank forum, the conference has become one of the broadest on the Street as lines differentiating banks from non-traditional competitors become increasingly blurred. It may seem odd for Merrill Lynch to be showcasing competing firms but, as one Merrill analyst comments 'The information will get out one way or another, and we want to be leading the way.'
'We focus on getting a mix of companies to our conference which we consider long-term, high performance companies. Alternatively, we look for companies active in restructuring,' says Judah Kraushaar, first vice president and senior bank analyst at Merrill Lynch. He adds that Merrill shuns the usual 'chief executive officer only rule' in order to draw companies with the best overall strategic orientation.
'While we encourage complete disclosure of financial information where relevant,' Kraushaar says, 'we want investors to walk away knowing where each company is coming from and going to in a competitive sense. That means strong strategic presentations by CEOs or other senior management.' Merrill supplements presentations with panels to explore specific topics, with a series of 20 minute presentations followed by a group Q&A session.
Kraushaar says the conference is perfectly timed: institutions are ready and eager for new ideas after the summer lull while many companies are beginning the planning process for the following year. Also, most conferences occur amid the hoopla of spring analyst surveys by Institutional Investor and Greenwich Associates, and the market is less distracted in the fall.
This year, Merrill's nine-member banking and financial services team is focusing the conference on Unleashing Value, with daily sub-themes covering advances in retail distribution, specialised strategies and reengineering strategies. While attendance is limited to institutional investors, Merrill analysts work hard during the event to get information out to a broad audience in morning calls, breaking calls during the day, and extensive written follow-up.
Techno Wizardry
San Francisco-based Hambrecht & Quist is well-known as an underwriter of dynamic high-tech companies from Silicon Valley. It is even better known for its standard-bearing technology conference, now entering its 25th year. The April event, with some 300 companies representing industries like semi-conductors, telecoms, database storage and computer software, is probably the largest of its kind and viewed as a 'must-attend' by many institutional money managers.
'Investor conferences are not diminishing,' marvels Carole Newman, vice president of corporate communications and director of conferences at Hambrecht & Quist. 'They are increasing in number and size. The H&Q technology conference keeps growing: it is here that institutions gather, take a broad look at emerging technology companies, and go shopping for new investments. Companies have the opportunity to reach more institutions than they could in several months of one-on-one meetings, making the conference a cost-effective way to achieve visibility.'
Newman makes no bones about H&Q's strict policy of having CEOs make company presentations at the conference. 'It ensures a high level of quality, and keeps the investors getting on the plane,' she says. Some institutions, like Fidelity, send up to eight fund managers, and consider the event 'as one of the best shopping sprees around', according to Newman.
Interestingly, a full one-third of companies attending H&Q's technology conference are privately-held. These companies tend to be of a calibre and peer group that should see them going public within a year or two. 'Private companies are there to show institutions the next wave of technology and services,' Newman explains.
H&Q is a great believer in conferences in general with one covering Life Sciences healthcare; one on the Internet (held in New York); and an interactive entertainment conference in Snowbird, Utah. In February, the firm held its first emerging market growth conference in Paris to showcase international companies which have gone public on Nasdaq; in May the team was in London for the BIL biotechnology conference (see box, page 65); and then it was back to Silverado for a consumer brands conference. For H&Q the conference business is an annual affair that just keeps on ticking over.
The Bear Makes Waves
One of the world's largest technology conferences, Bear Stearns' June event places up to 120 companies in front of some 800 institutional investors. The three-day conference, now in its seventh year, covers the industry under the banner Sailing the Seven Cs - communications, components, computer hardware, computer software, consumer electronics, content and convergence.
At the helm of the conference, Andrew Neff, senior managing director and technology analyst, strives to increase the quality of participants while providing the best level of interaction between his clients and company managements. 'A great deal of thought goes into the overall design,' Neff says. 'We aim for the most interesting topics and keynote speakers, and schedule company presentations and break-out sessions for maximum attendance. We want to give investor choices, and our only concern is not providing enough.'
This year's programme includes keynote presentations from companies like Cisco Systems, Compaq Computer, Intel, MCI Communications, Microsoft and Sun Microsystems. A total of nine panels will focus on critical investment issues. One of the most popular features is a 'hot products dinner', which sizzles with the latest computer games and gizmos. Computer presentations are the norm, though just two years ago organisers were befuddled by laptop toting Microsoft executives.
Neff notes that private one-on-one meetings and informal dinners are a growing component of this conference. 'Break-out sessions used to be an option, but now we assume every company wants one,' he says. 'We invite the media to public presentations, but break-out sessions are off-limits. The idea is to provide different classes of events, with some offering the chance for companies to talk candidly about issues they don't want to be published.'
Company presentations and break-out sessions are each limited to 35 minutes, which Neff says is a compromise between the time needs of a presenter and the half hour attention span of many investors.
Artful Dialogue
Tucked away in a suite of offices at the World Trade Centre is the nerve centre of the New York Society of Securities Analysts (NYSSA). Fibre optic cables snake behind art-filled walls, connecting robotically controlled cameras and a barrage of microphones, while touch-sensitive screens control audio visual equipment, lights and window blinds. This venerable institution, a forum for investment professionals and corporate managements since 1937, is girding itself to meet the millennium with the latest technology for the ultimate high in investor conferences.
With more than 5,500 members, including analysts, portfolio managers and other professionals, NYSSA is the largest analysts' society out of some 76 in the Association for Investment Management and Research (AIMR). Besides a host of education programmes for CFOs and securities analysts, NYSSA is the site of presentations by some 150 companies a year. Practically every major US company has appeared on the premises over the society's half century existence, notes Wayne Whipple, executive director. Though presentations by single companies have been the norm, NYSSA is now hosting multi-company conferences.
'What makes NYSSA unique among conferences is the audience of sell- and buy-side analysts that attend from all over Wall Street,' remarks Whipple. 'They are neutral, and not on the look-out for investment banking business or broker commissions. Also, ours are the only conferences televised live. When a company appears here, it appears before the world.'
Whipple is referring to NBC Private Financial Network (PFN), NBC Desktop Video's professional information service, which pipes video onto the computer screens of 150 institutions in the US and Europe, with Asia targeted for more sites.
Besides televising the regular round of NYSSA seminars and programmes, NBC is teaming up with NYSSA to produce roundtable discussions of analysts and executives debating industry-specific issues. Soon NBC will begin providing coverage of NYSSA presentations on its Web site, with video stills and live audio.
All the new technology serves to extend the reach of company presentations through every conceivable means. Events are announced in the NYSSA and AIMR calendars, on news wires, in Investor's Business Daily and Barron's, and on NYSSA's Web site at www.nyssa.org. Companies can also opt for specialised mailing lists from CDA Investment Technologies to help target specific audiences.
Electronic versions of a company presentation go out over First Call, Dialog, DowJones/NewsRetrieval, NewsNet, TFN, DataStar, OneSource and Offline, with a summary sent by Businesswire. Finally, Darome Teleconferencing provides a two-way telephone hook-up to increase the scope of presentations. Following the conference, video and audio tapes are made available, along with a hard copy transcript including the Q&A session from Journal Graphics. This makes the NYSSA conference reach as impressive as any on the schedule.
Wall Street Forum
With brokerage-sponsored conferences restricted to the firm's institutional clients, and analyst societies off-limits to non-members, a relative newcomer to the line-up is shooting for maximum distribution. The Wall Street Forum, formerly known as International Corporate Forum, attracts sell-side analysts and buy-side institutions, regardless of affiliation, from across North America to its four New York-based investor conferences held through the year in June, October, December and March.
'Brokerage firms do a fine job running conferences,' says Gerald Scott, Forum president. 'Still, a broker may invite only its investment banking clients to present, while we're non-partisan. Inviting the entire spectrum of sell- and buy-side professionals is something a brokerage firm would never do.'
The Forum sends out invitations to some 14,000 professionals, as well as issuing electronic invitations to institutional investors around the world through Bloomberg, BusinessWire and First Call networks. Scott says 84 companies and 830 analysts and portfolio managers attended the March conference, with more expected in June.
Something else a brokerage would never do is distribute information for free via every means possible, adds Scott. Group meetings are broadcast via NBC Desktop Video Private Financial Network (PFN) and the Dow Jones Investor Network, which expands the audience of any meeting by an estimated 40-80 people.
The conferences are also covered by the Forum's weekly investor relations programme. Meet the Management on America Online, Prodigy and the Forum's home page on the Internet. A measure of the Forum's online success is the 19,000 AOL members who accessed the site during March alone.
Companies pay over $3,200 to appear at one of the Forum's conferences, which entitles them to all the multimedia perks, plus three hours of meeting time broken into a 45 minute presentation and Q&A; a 45 minute break-out session; and an hour and a half for lunch. Scott explains that companies can post an investor relations presentation consisting of text and slides on Meet the Management and update it quarterly for a year after the conference. Press releases, SEC filings and even links to company home pages fill the online site.
'Conferences are a big part of how companies reach institutional investors,' Scott says. 'We blew the partisanship out of the traditional model. With independent sponsorship, the Forum extends the investor relations reach of company management to the whole financial community, in person, via television and online.'
Europe, Too
Investor conferences have their longest history in the US but they are no longer confined to that market. Some European houses have started running these events; and a number of US investment banks put on conferences in Europe and beyond, sometimes in conjunction with local firms, often to introduce a group of US companies from a particular sector.
In May Rothschild's Biotechnology Invest- ments Ltd (BIL) held its fourth Investing in Bio-technology conference in London in partnership with Hambrecht & Quist. BIL is a listed investment trust with stakes in a broad range of companies in the sector, from venture-backed start-ups to publicly-traded larger stocks. It held its first conference - solely for shareholders - in 1991.
'BIL originally decided to hold the shareholder conference to meet the educational needs of its investors,' notes Fiona Brown of Chatto PR, the event organisers and PR consultants to BIL. 'The decision two years later to join forces with a partner - Hambrecht & Quist - was aimed at broadening the audience.'
That strategy seems to be paying off: over 300 people attended the conference this May to hear presentations from 22 companies, about half of which are in the BIL portfolio. Many of the delegates - mostly fund managers, analysts, venture capitalists and pharmaceutical industry representatives - also arrange one-on-one meetings with the companies during the day, according to Brown. 'Deals are certainly done,' she says.
Biotechnology - a fast-changing industry dominated by the US - is an obvious subject for this kind of investor conference but it's not the only area. This month (June) Robertson Stephens is putting on its first International Investors Growth Conference in London, at which it is showcasing an impressive roll-call of companies, many but not all of which are in the computer industry. The event follows Robertson Stephens' recent opening of a UK office and includes presentations by some two dozen companies, such as Microsoft, Intel, America Online, Gucci and Amgen.
But US firms do not have a monopoly over this kind of event in Europe. Rea Brothers, for instance, recently held its second Growth Companies Conference in London. The companies were from a range of sectors and included, among others, brewers J D Wetherspoon, football club Tottenham Hotspur and London cab manufacturer Manganese Bronze.
More surprisingly, perhaps, the Paris Bourse has taken an initiative to attract foreign investors to French companies. This year, for the third time, it has organised conferences for investors in Frankfurt (with Commerzbank), New York and Boston (with SBC Warburg) and London and Edinburgh (with FERRI). The companies on tour include LVMH, Canal+, Guilbert, Sita and others.
This may be an unusual approach for an exchange but Marianne Huv-Allard of the bourse says the initiative pays dividends for all parties concerned.