IR Monitor – 26th January 2022
Investor Relations News
With Unilever facing criticism from long term investors, we begin this week with a reminder of the importance of investor relations. Next, we explore what, if any, opportunities lie in store for the FTSE old stalwarts against a backdrop of increasing wariness among investors towards tech stocks. Many of the newer names to come to market in 2021 have been underperformers, as it turns out. With 2022 well underway we also look at the outlook for the year for proxy voters. We move on to why some people are claiming that the move towards ‘social purpose’ may well stop businesses from being able to perform at their best. Finally, we look at the rise of swearing on conference calls; from Chairmen to CEOs and CFOs it seems that everyone is using expletives.
This week’s news
Investor relations may be obscure, but in modern business they are increasingly important
Famed investor Terry Smith recently expressed his fury with consumer group Unilever by criticising the company’s preoccupation with purpose. Yet, as the Times has suggested, he also revealed something else that was bothering him: “against the backdrop of this miserable performance” he said, “the company did not even attempt to contact us for the eight years [2010-2018] we were shareholders.” It seems Smith is not the only investor who has been left with a bad taste in his mouth. Unilever, which recently abandoned its £50 billion plus acquisition, is accused of excluding shareholders from its strategic thinking. Patrick Hosking has suggested in The Times that, while companies’ reluctance to pass on bad news and engage with shareholders on difficult issues is nothing new, a strong investor relations department is central to maintaining their relationship. The investor relations industry is here to stay and large listed companies need effective conduits to bridge both sides.
Investors are running scared from tech stocks — but that won’t save the FTSE dinosaurs
The Sunday Times has explored the future of London’s FTSE 100. Despite investors becoming increasingly sceptical of tech stocks and returning to dividend-paying options, FTSE 100 companies have failed to capitalise. The paper concludes that London simply has too many outdated companies with too few opportunities for growth on the horizon. By way of illustration, Apple shares alone are now turning over twice as much as the entire London market on a daily basis (i.e. $12 billion a day compared to $6 billion).
Last year set records for I.P.O.s — but was terrible for I.P.O. performance
CNBC has reported on the dismal returns for investors who were keen to capitalise on last year’s IPO rush. While traditional IPOs jumped to their highest levels since the late 1990s their performance has struggled to match historical averages. Data from BoA reveals that, on average, deals have declined 14% in the six-month post- IPO period versus a historic 14% gain; a total inversion, in other words. A case in point is electric pick-up manufacturer Rivian Automotive – one of the biggest IPOs of 2021. Since floating, the stock has been on a downwards trajectory and it is now trading at about 12% below its IPO price.
The 2022 outlook: What’s on the (proxy) cards this year?
We now look at some of IR Magazine’s forecasts for investor relations in 2022. Given that a considerable number of institutional investors are looking to hold shares in companies for a long time, how a company performs on matters regarding sustainability is highly important. With discussions over the past two years turning towards diversity, equity and inclusion, conversation may well turn to ways to close those gaps, IR Magazine has suggested. Climate change will likely continue to dominate discussions. The publication has urged companies to remain proactive in seeking solutions and driving change and it has stressed the importance of maintaining open channels of communication.
Larry Fink is Wrong: Business Doesn’t Need a ‘Social Purpose’
At a time when social purpose has become apparently central to the identity of a business, Bloomberg’s Adrian Woodridge has asked whether the need to define purpose has gone too far. The British Academy recently defined the purpose of businesses as: ‘creating profitable solutions for problems of people and planet, and not profiting from creating problems’, but what does all of this verbiage actually mean? Terry Smith has memorably lambasted Unilever on this particular point: “a company which feels it has to define the purpose of Hellman’s mayonnaise has, in our view, clearly lost the plot.” But even if all businesses were to put social purpose at the heart of everything they do, would this have averted the global financial crisis, for example? For Woodridge the answer is no. He suggests that loud proclamations and busy undertakings of purpose will make it harder for companies to undertake their basic role of competing to produce the best products.
And finally … 2021 was a record year for expletives in conference calls
Findings from Sentieo have revealed that 2021 was a record year for expletives during conference calls. A total of 166 transcripts contained expletives in 2021 which is up from 104 in 2020. Interestingly, it is mostly management teams employing them; analysts and investors are apparently more polite for the most part. The record for number of expletives is held by a Communications company (with 25 hits) but close behind is an anonymous Airline company; IR Monitor readers here in Europe may have an idea about that one.
Contact Us
To be added to the distribution list for the IR Monitor, or for further information on the dedicated investor relations team at FTI, please contact [email protected].
| The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
©2022 FTI Consulting, Inc. All rights reserved. www.fticonsulting.com |
