While Mifid II has changed the economics of corporate access for both the buy side and the sell side, issuers are well positioned to make the most of these changes by engaging with both parties, according to speakers at the recent IR Magazine Think Tank in Palo Alto.
Grant Bartucci, associate director of corporate access and broker relations at Point 72, explained that one of his responsibilities at the hedge fund is to make sure the fund is focused on consuming the corporate access that is most meaningful to its fund managers.
‘What’s really changed for us is the focus on consuming resources that are most meaningful to us,’ Bartucci said. ‘So if it’s a meeting that costs more but is meaningful, by all means take that meeting. But at the same time, with all of the conferences and events that are out there, maybe we don’t need to go to every one. We’re being a lot more disciplined about the corporate access we’re consuming.’
Of course, part of Bartucci’s job is initiating meetings between Point 72’s fund managers and the senior management teams of the companies they’re following, replacing some of the work that would historically have been done by the sell side.
But Bartucci, along with fellow panelist Mary Turnbull, managing director of corporate access at Raymond James & Associates, was keen to emphasize the extent to which corporate access heads on the buy and sell side work closely together.
‘Our view [at Point 72] is that we just want to meet with companies, whether that’s through the sell side or a meeting we set up ourselves,’ Bartucci said.
‘The demand for corporate access continues unabated’
Turnbull acknowledged that the sell side is being squeezed on price, but she emphasized that this has led to greater focus on the quality of the corporate access that is being offered and the depth of the partnerships between brokers and investors, and brokers and issuers.
‘The demand for corporate access continues unabated,’ Turnbull said. ‘What’s really happening right now is there’s a lot of pricing pressure, which is what Mifid II has brought us. There’s a lot of focus on maximizing every dollar that is spent, both on the buy side and the sell side.’
She explained that she works closely with Bartucci and other corporate access heads on the buy side to ensure they’re getting the meetings they want, and that they have the right people in the room at the time.
Given Bartucci’s focus on value rather than cost, this is an approach that he appreciates – and one he suggests IR teams should also take, so they can get a better sense of why Point 72 is reaching out to ask for meetings.
‘We’re cognizant that we’re over-active in terms of requests for meetings,’ Bartucci said. ‘We’re working on being able to explain why you might have met with someone last week and we’re asking for another meeting this week. And if those requests don’t make sense, we can organize one big co-ordinated meeting, instead of getting lots of little requests.’
Turnbull added that if IR professionals are meeting with someone from Point 72, they should contact Bartucci to inquire about whether there are more fund managers who could be present in the room. This will prove to be a more effective use of management’s time, she said.
New forums for investor interaction
Turnbull said the number of meetings Raymond James organizes in a year is broadly in line with previous years, but that there has been a shift toward arranging some smaller interactive summits and events.
For companies based in the San Francisco Bay Area, there is the added bonus of a large number of bus tours occurring throughout the year – something that was mentioned by several panelists throughout the day as being a consequence of the significant IPO activity in Northern California in the last 12 months.
Both Joon Huh, vice president of investor relations at Zuora, and Shannon Tatz, vice president of strategy and investor relations at PROS, said their senior management team has also recently been invited to exclusive bank-sponsored events that have been very valuable.
‘I’m seeing additional invite-only very exclusive conferences, which are just for our CEO or CFO,’ Huh said. ‘They’re high-end events with selected investors there, and they are events our management team has got a lot out of.’
Tatz agreed, saying: ‘We’ve also attended those in the last year… they were probably the best events of the last year.’
Much was made earlier this year of the news that large institutional investors – including Fidelity, Wellington, and T Rowe Price – are looking to organize their own conferences, as reported in The Wall Street Journal.
Lauren Dillard, chief communications officer and head of investor relations at LiveRamp, confirmed that her management team had received invitations to attend conferences arranged by the buy side, but that at this moment they haven’t attended them. None of the other IR professionals in the room said they had attended a conference organized by the buy side. ‘It’s definitely a trend to keep an eye on,’ Dillard said.