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Sep 30, 2022

Finding opportunity in adversity: IROs discuss bear market conditions at the IR Magazine Think Tank – West Coast II

Investors looking for opportunities to put money to work, notes fund manager

With no end in sight for 2022’s bear market, IR professionals gathered in Palo Alto for the IR Magazine Think Tank – West Coast II to review the state of play. Adam Frederick, global president at Morrow Sodali, kicked off the day with a look at capital market and macroeconomic trends to prepare for in 2023, including a warning.

He pointed out that, during the prior down-market cycles in 2000 and 2007, the major US stock market indexes fell 50 percent on average. ‘If you look at it from that perspective, you could maybe make the correlation that… we’re only halfway through it,’ he said.

In this environment, access to capital will be more challenging on both the debt and equity side, said Frederick, but it also provides IR teams with the chance to expand their influence. ‘It gives you the opportunity to really have a seat at the table with the senior management team [and] the board,’ he said. ‘Understand where your weaknesses are and [make sure] your management team is fully aware of them and owns them.’

The next session heard from IR professionals about how the role of IR changes in a volatile environment. While the basic activities of the job may not shift dramatically, the intensity of the work does, the audience was told.

‘We’re working twice as hard just to keep up with that flow,’ said Jill Sawyer, vice president of IR at real estate investment trust Prologis. ‘And we’re the bellwether in our industry… so anything we say in terms of messaging… you really have to look at every word carefully for the read-through.’

Next came a key part of IR Magazine’s events: the roundtables. Here, attendees chatted about the issues being discussed on stage at their own tables, providing an opportunity for candid conversation and knowledge sharing among the IROs present. Other roundtable discussions were scattered throughout the day.

ESG engagement

After a coffee break, the next panel discussion tackled revamping ESG engagement strategy to meet increasing investor expectations.

Katie Schmitz Eulitt, director of investor relationships at the IFRS, talked about the recent merger of several sustainability reporting standards and frameworks under the International Sustainability Standards Board, but also the push for new rule-making in different jurisdictions.

‘There is tremendous momentum across markets for regulatory policymaking activity,’ she said. ‘So it’s really important that just as these voluntary standards and frameworks are coalescing, rationalizing and simmering down into fewer letters in the alphabet soup, we try to avoid regulatory fragmentation.’

Catherine Buan, head of IR, sustainability and ESG reporting at Asana, pointed out that companies around the world will need to adapt to the growing demands of regulators. ‘We’re all going to have to report it,’ she said. ‘All these operational units that have been independently running, doing social impact [and] policy [work]... we have to be the stewards of that information.’

Following lunch, IR professionals heard panels discuss targeting in a volatile market and best practices for investor events. And, as is traditional, the event finished off with an informal Q&A session with a panel of investors.

‘If you look at the cash levels of all active managers, they’re quite elevated,’ said Lloyd Kurtz, senior portfolio manager at Wells Fargo Wealth and Investment Management. ‘That should be reassuring to you because the academic studies say we’re always wrong, we’re always low beta, when we should be high beta at the bottom.

‘I wouldn’t be putting a lot of effort into trying to convince people not to sell. I would be putting more effort into appealing to people who are thinking, I’m gonna have to put this money to work. We’re already nine months into this brutal grinding bear market, and I’m looking for companies that meet our criteria.’

To find out more about the IR Magazine Think Tank – West Coast II, please click here.