IR Monitor – 22 May 2024

In this week’s newsletter:

• AGM season update from our Dublin team: key governance trends for the UK in 2024
• IR Voice – formerly The Ticker podcast – talks about investor-targeting strategies
• Student divestment wins feel good but do little, in the opinion of Merryn Somerset Webb. Just because you can doesn’t mean you should. She flags the further point that activist investing, after taking bigger stakes, would be a more effective approach
• Global investors wake up to cheap UK stocks as takeover activity rises, reports the Financial Times. Some fund managers have pointed to the increase in companies buying their shares as among the “early warning signs” of a stock market revival
• Investors in the London Stock Exchange Group sold a £1.6bn stake last week, as reported in The Times. Some IR takeaways from Peregrine Riviere IRO
• And finally … the return of Roaring Kitty. Matt Levine for Bloomberg asks: If you were Tesla would you hire Keith Gill to run investor relations?

This week’s news

UK 2024 AGM season update – FTI

The more things change, the more they say the same. At UK AGMs so far in 2024, most attention has been on executive remuneration, albeit with new trends evident. After years of caution, a number of stakeholders have pointed to a lack of competitiveness in UK pay structures in 2024, particularly versus US counterparts. Board and leadership diversity has also continued to rise up the agenda, while demands for board oversight of climate, cyber-related issues and AI continue to attract attention. New regulations are placing pressure on companies’ sustainability strategies and reporting, and meeting these new standards will require upgrades to existing ESG governance structures. FTI Consulting’s Governance team has compiled a comprehensive document detailing the latest trends in this space, including early vote results from the 2024 AGM season, as well as an overview of the ESG regulatory landscape. Document available on request.

The right investor targeting strategies

In an episode of IR Voice, formerly the Ticker, we hear about how to craft an investor-targeting strategy that works, how investor targeting has changed and evolved since the pandemic, and the thinking behind the recently released proxy voting guidelines. IR Magazine senior reporter Tim Human speaks to Elena Arabadjieva, head of IR at Cromwell European REIT, a real estate investment trust headquartered in Singapore. She explains how her company crafts its investor-targeting strategy, the impact of technology in supporting these efforts, and the support it receives from the sell side. At the end of the episode, two additional guests discuss the new proxy voting guidelines targeting investors that aim to counteract the influence of the ESG ideology & how these underscore the primacy of shareholder interest.

Student divestment movements wins feel good but do little – Bloomberg

Last week, pro-Palestinian students from Trinity College Dublin called university endowments to drop anything to do with Israel’s investment and defence. Although some research shows that student-led divestment movements are not new and rarely affect the targeted industries, protesters’ efforts have been fruitful at TCD. Yet additional research from two finance professors suggests that divestment is “too small to meaningfully affect real investment decisions.” Activists might argue that companies divesting are still taking action and not hurting anyone. But Bloomberg discusses several cases where companies or universities have risked their investment universe getting very small indeed. Divestment often results in higher costs and reduced diversification for endowments, ultimately hurting future students who rely on these funds for grants and facilities. A further point made by Bloomberg is that activist investing, after taking bigger stakes, would be a more effective approach.

Takeover activity rises in the UK

According to Emma Dunkley from the Financial Times, the affordability of UK stocks means they are ripe for a new wave of takeover activity, potentially triggering a flood of investment. She quotes a hedge fund executive claiming that “The [UK] market is for sale and there are signs that global investors are finally starting to wake up to this opportunity.” To add weight to the statement, the value of offers for UK-listed companies has hit the highest levels since 2018. Voices in the industry believe that the cheap valuations combined with an increase in deal-making activity and improved economic outlook will boost UK stocks and attract investment. Maybe there is hope for London after all as “things can’t stay cheap for ever”, in the words of Nick Train, co-founder of Lindsell Train. Share buybacks are considered among the “early warning signs” of a stock market revival.

Investors in the LSEG sold a £1.6bn stake last week – IR takeaways

The Times wrote on last week’s sale of a £1.6 billion combined stake from the original Refinitiv consortium, led by Blackstone which has effectively exited LSEG in full. The consortium of investors also included the Canada Pension Plan Investment Board (CPPIB) and Thomson Reuters, which were given shares in the London bourse-owner as part of their acquisition of Refinitiv, the financial data company, in 2021. The final placing last week was the only ever Jumbo Sponsor Secondary Accelerated Equity Offering (AEO) to price at a premium globally and the first UK Jumbo Secondary AEO to price at a premium ever. Peregrine Riviere, the LSEG group head of investor relations, took his reflections on best practices in IR to LinkedIn. His tips include intentionality in exit strategies and meeting investors often and critically, in person. Riviere also pointed out the twofold and critical role of hedge funds as owners of the shares as well as liquidity providers. 

And finally … the return of Roaring Kitty

Meme stocks are back. Last week, GameStop Corp. shares surged following Keith Gill’s return to social media. Better known under the online alias “Roaring Kitty”, Gill drove the meme-stock mania of 2021 and was the main character of a recent biopic. The account’s post on X showed a man leaning forward with what looked like a gaming controller, which some traders interpreted to mean that Gill was coming back into action. Gill, whose account has long been dormant, shot to fame in 2021 by rallying day traders on Reddit to squeeze GameStop short sellers. In his recent column, Matt Levine from Bloomberg ponders how the financial markets can best utilise Roaring Kitty’s unique skillset and influence. The suggestions include setting up a hedge fund, buying GameStop stock and rallying the value of the shares up or becoming an activist investor. Our personal favourite? Appointing him the head of IR for GameStop or maybe even Tesla.  

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