IR Monitor – 16 October 2024

In this week’s newsletter:

• How to Modernise your next Investor Day: FTI attended this webinar last week.
• Visit Abu Dhabi: the capital of capital. Middle East Economy reports that the Emirate now tops Global SWF charts with $1.7 trillion in AUM – slightly more than Oslo.
• British bosses in line for bumper paydays amid talent exodus fears, reports The Telegraph. Shareholders have been given leeway by the Investment Association to reward FTSE chiefs with higher salaries in order to better compete with US.
• Leaving purgatory: inside the defence shift from sin stock to ESG portfolios. IR Magazine looks at how shifting geopolitical tensions and escalating conflict are opening investor doors that used to be firmly shut.
• How bosses are using LinkedIn to charm investors: chief executives are using social media to appear more down to earth, reports The Times.
• And finally … sometimes the analysts just tell your story in a more engaging way. Alphaville asks: are these the sell side’s best-ever puns?

This week’s news

How to Modernise your Investor Day

IR Magazine, in partnership with Lumi, polled IR specialists for their insights on investor days. When asked for their biggest challenges, specialists’ concerns included preparing speakers, macroeconomic uncertainty, and catering to retail investors – but one of the most common issues was maximising attendance. Since the pandemic, companies are increasingly angled towards in-person events, while still wanting to maximise reach through including online elements. However, investors and analysts are, inversely, far more reluctant to travel to attend presentations. The key takeaways? Make the day worth travelling for. Make presentations shorter, more engaging, include networking opportunities. Above all, ensure that the investor day is held for a reason – beyond wanting an annual event.  

Abu Dhabi: the capital of capital 

Just six cities manage two-thirds of global sovereign wealth fund capital, and Abu Dhabi is now top of the list, beating out Oslo as the capital of capital. According to Middle East Economy, Abu Dhabi’s emergence as the global leader in managing sovereign capital reflects the increasing financial influence of the Gulf states. Part of its success comes from the fact that more countries are beginning to use SWFs to manage their financial assets – meaning these funds will play an important role in shaping the global economy. Most of these funds invest in key sectors such as energy, aerospace and technology, as well as public pension funds (similar to Oslo holding $1.6 trillion worth of assets in their Government Pension Fund). The risks facing Abu Dhabi’s dominance currently include competition from other financial hubs, regulatory changes and geopolitical concerns. 

Investors becoming more flexible on FTSE chiefs’ remuneration packages

The Investment Association has released more lenient guidelines on executive renumeration. As reported in The Telegraph, these pay packets should be linked to performance, benefit the long-term health of the business and sustain share price growth. As of now, fund managers can make decisions on a case-by-case basis, if they believe a larger pay packet for bosses would be in shareholder’s best interests. The IA has released these guidelines to reduce investor rebellions, and ensure British companies are getting the best talent on top. Currently, employees in the US are paid 60% more than their British counterparts, and this difference is only exacerbated when it comes to top pay. The highest paid FTSE 100 CEO is paid 7 times less than the top earner on the S&P 500. The fear is that London will become a global backwater for talent – a fear the IA believes will be reduced through better pay packages to attract and retain the best CEOs. 

Rising geopolitical tensions opening new investor doors to defence stocks

Once considered “sin stocks”, defence stocks have long been shunned by responsible investors and relegated to the fringes of investment portfolios. However, due to the invasion of Ukraine & recent escalations in the Middle East, the ESG narrative around defence stocks is evolving, as they appear to be on their way out of the inferno towards an investor purgatory – with perhaps even a chance at ESG paradise. As NATO countries, Russia & Japan are all planning to significantly boost their defence budgets, some investors have begun to rethink the exclusion of defence stocks in sustainability funds, note Garrett Muzikowski and Andrea Hearon from FTI’s M&A, activism and governance advisory practice in conversation with IR Magazine. This change in investor perception is not universal, as some ESG funds are still reluctant to embrace defence stocks fully. However, as defence companies continue to develop their sustainability disclosures and ESG credentials, and conflict across Europe and the Middle East only intensifies, it looks like the trend of rising share prices for defence stocks is here to stay.

How bosses are using LinkedIn to charm investors – The Times

If you’re a CEO, a well-timed video of your cute dog might just be the key to winning over investors according to The Times. In a bid to enhance their public image, CEOs of major American & British companies are increasingly turning to social media, particularly LinkedIn, to share personal, candid videos. During earnings season in particular, trading the corporate gloss for shaky videos shot on an iPhone lends an authentic edge. Research indicates that employees and stakeholders prefer executives who are active on social media, with 86% of financial readers deeming it important for business leaders to use platforms such as LinkedIn. Yet, there are risks of backlash from poor execution, meaning CEOs must walk the fine line of compelling corporate storytelling without slipping into awkward, forced informality.

And finally… Could these be the sell side’s best-ever puns? Alphaville investigates

Buy low, sell high, and keep your puns in stock! Over the summer, FT Alphaville put out a plea for puns from financial notes and the results did not disappoint. While some analysts lean into the seasonal mood (“BoE at Christmas: let it slow”), others are keen to tap into their musical side, showing that they can really “jingle” all the way to clever wordplay…  JPMorgan for instance noted “Asos – Frockin’ all over the world”, while Barclays offered the catchy “UK reserves remuneration – Fears for tiers”.  And though not a pun, the note “Can’t Recommend A Purchase” from the 1980s remains a timeless, universal judgement (on Robert Maxwell as it happens). One thing is clear: in the world of sell-side analysts, a pun is the perfect portfolio addition.

To be added to the distribution list for the IR Monitor, or for further information on the dedicated investor relations team at FTI Consulting, please contact [email protected].