IR Monitor – 10 January 2024

In this week’s newsletter:

In this week’s newsletter:

• When CEOs should ditch the ‘PR polish’: straight talking can bring benefits but needs to be done with care, suggests the Financial Times
• Last year was big for activist investors. This year could be shaping up to be an even bigger one for activist investors, Barron’s forecasts
• Reddit, Shein and Stripe may lead a revived IPO market in 2024. The U.S. IPO market is expected to stage a rebound after two dismal years with few deals
• Investors are looking to share buybacks to keep the US stock market afloat
• Scrutinising the UK’s new ‘match fit’ listing rule book: Alphaville on the FCA’s plans to make London the ‘go-to’ financial centre in Europe
• And finally … No-one wants to be an IRO when they grow up but the role is far from just a stepping stone, promises IR Magazine 

This week’s news

When CEOs should ditch the ‘PR polish’?

The Financial Times discusses why it may be time for CEOs to embrace candidness and leave behind the ‘PR polish’. At a time where the management of business communications is airtight, trust in leaders continues to drop & it may be in the best interest of business executives to adopt a straight-talking approach. However, easier said than done, as executives must walk a fine line between transparency vs giving too much away & avoid jeopardising their company’s reputation. Some advice is provided by different professionals on how executives can be seen as more candid. “Being very clear in how you intend to follow through on the things you commit to” is one. Saying “I don’t know” is another, so long as a promise of clarity follows, may be a better response in certain situations. In sum, authentic communication comes down to being able to balance displaying your values in a relatable and genuine manner whilst maintaining a sense of professionalism. 

2024 could be an even bigger year for activist investors: Barron’s

Barron’s predicts that 2024 could be even bigger for activist investors than 2023, when 823 campaigns were launched globally with 15 of them alone by Elliott Management. The latter also stood out for the most campaigns at companies with market caps above $1 billion, and managed to replace a few CEOs and add 16 board seats at six different places through settlements. Elliott’s success looks set to continue in 2024, and so does that of the wider activist community. While Walt Disney is currently facing an onslaught from four different activists, including Trian Fund Management and ValueAct Capital, Barron’s predicts that 2024 looks to be a volatile year for markets. However, for activists, this volatility may just provide a golden opportunity to “seize upon price discrepancies to build their positions.”

The U.S IPO market is expected to stage a rebound after two dismal years with few deals: MarketWatch

The U.S. IPO market looks to be shaping up for a recovery in 2024, reports MarketWatch. Expectations that the Federal Reserve is going to cut rates and boost market conditions have lifted hopes for an IPO rebound. A Renaissance Capital analyst, Angelo Bochanis, anticipates a rebound and believes “investors may be encouraged by the prospect of rate cuts”. Renaissance expects that between 120-170 deals will occur in 2024, representing $20 to $45 billion – comparable to 2020. A strong start is expected, as BrightSpring Health Service Inc. and Finland-based Amer Sports have already filed their applications with regulators. But investors are eagerly awaiting a number of other companies to file for IPO, including clothing giant Shein, social-media platform Reddit, payment company Stripe, and fin-tech company Plaid.

Investors are looking to buybacks to keep the US stock market afloat

Looking to the year ahead, Bloomberg reports on the increasing popularity amongst companies to initiate share repurchases, with more than 40 buyback announcements already released in Q4. For the past five quarters buybacks have steadily fallen, with rising interest rates stirring up a reluctance to repurchase shares due to higher borrowing costs. Predicting a buyback spree, Jess Menton notes a collective spend of around $160 billion from Apple, Alphabet and Meta in 2023, compared with at least $840 billion expected in 2024 from S&P 500 firms. So, what to keep in mind for executives and investors? Market timing will be crucial, particularly both when to buy back shares and when to expect interest rates to peak, and the Fed’s meetings will be key milestones. However, there is uncertainty on when rates will be cut exactly, with current predictions pointing to mid-2024 or even later. 

Scrutinising the UK’s new ‘match fit’ listing rule book: FT Alphaville

In the aftermath of the strangely timed proposed new UK listing rules by the FCA (20th December), the Financial Times discusses the many reasons why London, alongside Hong Kong and several other European equity capital markets, has faced a serious downturn in recent years whilst the US have become increasingly attractive and now represent the default location to list in the West. Craig Coben praises the merits of the proposed reforms by the FCA in attempting to rectify this downturn. A plethora of interconnected factors has driven this change in the UK specifically, including Brexit, anaemic growth, high taxes, increasing trade barriers and the broader macro-economic environment. Will the new proposed rules manage to fight the gloom and doom surrounding UK capital markets?  

And finally … no-one wants to be an IRO when they grow-up, but…

A career in Investor Relations offers not only a foot onto the corporate ladder, but a valuable vocation, reports Thomas Kudsk Larsen in IR Magazine. As an IR Consultant, he discusses his somewhat accidental journey into the world of IR, hurtling into the industry after an IPO, and eventually evolving into a highly successful and rewarding career. Thomas discusses the nature of the job in terms of the importance of relationship building, the impact of increasingly fragmented geopolitics and finally, the personal growth and satisfaction one can achieve when progressing through a career in IR. 

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