Capital Markets & Investor Relations

IR Monitor – 3rd November 2021

Investor Relations News

We begin this week with the rise in majority support for Environmental & Social proposals in the US. Next, we look at the impact of Brexit on Ryanair which is preparing to conclude its 20-year listing on the London Stock Exchange to comply with EU rules. We then turn to the US junk bond market which has swelled to a record size as debt investors look for yield. Equity investors looking for yield in the UK, meanwhile, will be cheered by the Q3 surge in dividends. From here, we move to look at the top ten most shorted UK stocks featuring a few interesting names. Finally, to Canada where we look at how Rogers’ chairman dealt with the board’s decision to fire him…he fired them right back.

This week’s news

Majority support for E&S proposals almost doubles in the US 

A report by Georgeson has revealed that 33 environmental and social proposals won the backing of voting shareholders this year compared to only 18 last year, IR Magazine has reported. The report spotlights the fast-growing appetite among shareholders and companies for more ESG–oriented policies. A case in point is Nike where shareholders rallied significant support for four social proposals, although none of the resolutions passed. The Georgeson report also highlighted the high numbers of shareholder proposal submissions compared with previous years as well as an increase in withdrawn proposals at 249 compared with 109 in 2020. The large number of negotiated settlements or withdrawn proposals in advance of 2021 annual meetings demonstrates the high level of shareholder engagement that occurs during the off-season before proxy statements are filed.

Ryanair mulls London delisting 

The Financial Times has flagged that Ryanair is preparing to bring its 20–year listing on the London Stock Exchange to an end in order to comply with EU rules in the aftermath of Brexit. This follows the company’s announcement that it has returned to profit for the first time since 2019. The airline recently said that it has begun a review into whether to give up its London quote, which is its secondary listing, to focus on its primary market, in Dublin. The issue over its listing is down to strict EU rules which insist EU airlines are majority owned and controlled by nationals from within the bloc, Switzerland, Norway, Iceland or Liechtenstein. Ryanair has subsequently barred non-EU individuals from buying shares in the company and it extended this to institutions and individuals in the UK at the start of this year.

New companies raising cash swell US junk bond market to record size

A record 149 companies, including cryptocurrency exchange Coinbase and medical supplies manufacturer Medline, have joined the high yield bond market this year. They are part of a new wave of entries to the US junk bond market and have fuelled its increase in size, the Financial Times has reported. “A lot of those deals are made possible by a very low cost of capital and with that you see more issuers coming into the high–yield bond market,” said Chris Blum, head of leveraged finance at BNP Paribas. Outstanding debt has risen above $1.5trn as these 149 issuers have borrowed from investors seeking yield.

Top 10 most shorted UK stocks 

City A.M has revealed that Cineworld, Metro Bank, and Sainsbury’s are among some of the UK’s most shorted stocks. Cineworld took top spot after it was forced to close 9,518 cinema screens during lockdown. The trend has continued with 9.2% of its stock currently shorted against it – an increase from 7.5% in July. Petropavlosk PLC took second place, with four funds collectively holding 6.9% of the gold mining company’s stock and betting on the share price to fall. Among fund managers, GLG hold the most short positions on UK listed companies with 23. They are closely followed by Marshall Wace, Blackrock and JP Morgan. With individual investors playing an ever greater role, shorting stocks is no longer the exclusive pursuit of institutional investors. With concerns over rising interest rates, even some of the biggest US tech names have not escaped with particular short interest in names such as Apple, Uber and Tesla.

UK dividends surge again in Q3 but ‘caution needed’ for 2022 

Investment week has reported that UK dividends have soared beyond expectations yet again in Q3, recovering nearly 90% year-on-year. This was set against the “pandemic-struck” Q3 of 2020, during which pay-outs halved across the board. The rise has been driven by an “unprecedented” boom in the mining sector as well as a rebound in the oil industry. Indeed, mining, oil and banking have made the biggest contributions to growth, whereas telecoms was the only industry that saw a decline. Dividends from the mining sector quadrupled year-on-year to £12.8bn and “outgunned” the next five biggest sectors combined. For the full year, miners will be responsible for “nearly £1 in every £4” distributed to shareholders by UK-listed companies. Falling commodities prices mean mining pay-outs will likely be smaller next year, however. While the robust rebound in dividends in 2021 has been stronger than expected, caution is needed for 2022 when dividend growth is likely to slow.

And finally … Rogers Chairman Fires Board for Firing Him for Firing CEO

97% of the voting shares of Canada’s largest wireless company is controlled by the Rogers family trust. Edward Rogers, claims that in his position, as Chair of the trust, he controls the voting shares and can choose the directors of the company. His mother and sisters disagree. Last Friday, Rogers asked a judge to validate his move to stack the board of the company with his allies. The family fight has been escalating since September, when he attempted to oust Chief Executive Officer Joe Natale. In turn, the board stripped ER of his role as chairman. Long story short, for the past week, one of Canada’s largest public companies has had two different men claiming to be chairman and two different groups claiming to represent the 14-person board. Bloomberg has written an entertaining account of the whole affair which begs an interesting question: who controls a company?

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