Sell-side interview: Roddy Davidson of Westhouse Securities
Each year, IR magazine – the print magazine that brings you IR Magazine – interviews hundreds of investors and analysts to find out who’s best at investor relations in Europe.
The full results, along with in-depth profiles and interviews with highly ranked companies, can be found each year in the Investor Perception Study, Europe.
The respondents to our electronic survey and telephone interviews are put into a hat and one person is picked randomly to win an iPad.
For last year’s survey, that winner was Roddy Davidson, director of media research at Westhouse Securities, a UK-based broker with offices in London and Glasgow. Here, he answers some questions for IR Magazine.
How many companies do you cover?
Historically, I write on 15-16 companies, while actively monitoring probably around 20-30 others.
What size companies do you cover?
Currently we look at companies from around the $30 mn market cap up to the top end of the mid-cap index.
How often do you meet with the companies you cover?
I meet with companies a minimum of twice a year, supplemented by dialogue around any significant events.
Do you let companies check your research before it goes out?
Not normally, although I’ll look for feedback on the content of initiation notes to verify that they are factually correct.
From an investor relations point of view, is there anything you think companies could do better?
Clear communication is always key. Most investor relations people are good at their job, although I have come across instances when they act as a block rather than a conduit to management.
Do any IROs stand out as very good at his or her job?
Many of the smaller companies we cover don’t have a specialist IR function. Among those that do, I think Rob Gurner and his team at Aegis do a particularly good job.
Interim management statements look to be on the way out in the UK. Would you miss them?
On balance, no, although there are very valid arguments on both sides of that debate. On the one hand, they provide a frequent source of information from corporates and therefore greater transparency.
But less frequent communication should give diligent analysts the opportunity to add more value by keeping up with events.
And it will be beneficial for companies to be measured over slightly longer time periods rather than being on an almost continual treadmill. This should ease their admin burden and crucially allow more time to focus on operational matters.
Fewer formal reporting dates could also be a benefit to companies by encouraging investors to take a slightly longer-term view.
Do you see the iPad as a possible work tool? Are other sell-side analysts using iPads much?
Yes to both – it seems to be turning into an increasingly prevalent business tool.
Brokers are having a tough time. What’s been the impact on the quality of research being produced?
It’s hard to say, as we don’t usually see competitors’ output.
In theory, there should be pressure for analysts to be more diligent and to redouble their efforts to add value to clients, although there is also the risk that recommendations become more short term as competition for reduced commission income intensifies.