IR Monitor – 18th May 2022
Investor Relations News
We begin this week recapping the news of BlackRock’s 180 degree turn on the issue of climate change and stakeholder capitalism more generally. Then, we take a look at the changing face of investor activism and the more subtle approaches that activists are increasingly turning to. Next comes an article exploring why companies ought to focus on communicating with long-term shareholders, rather than pandering to the whims of short-term retail investors. Turning to more than just a PR disaster, we look at SoFi’s accidental release of their first quarter results which caused the shares to plummet. Elsewhere, the Grindr SPAC is revealing the true allure of this popular alternative to the traditional IPO. Finally, we take a deep dive into the development of the ‘anti-woke’ asset managers through a profile piece on Vivek Ramaswamy, who wants to put profit back on the capitalist agenda.
This week’s news
BlackRock: taking its foot off the pedal on climate change and resetting “stakeholder” capitalism
As the FT reported last week, the fund manager BlackRock has announced that it will not support most of this year’s upcoming shareholder resolutions on climate change. BlackRock has suggested that proposals, including timebound commitments for transitioning away from fossil fuels, are too prescriptive, too extreme or entail too much micromanaging. This is quite the turnround for a firm that has been criticised for its meddling “stakeholder” capitalism.
Activist investors are becoming tamer
Activist investors may have had a busy first quarter, with the most campaigns launched for several years, but their tactics are becoming softer, The Economist has reported. The new breed of activist is less abrasive, and more subtle, choosing to operate quietly, pushing a company’s board in private and reserving the ability to grumble in public if the board resists. Activists are also becoming less likely to lock horns with management. Yet, as activists become less confrontational, regulators are becoming more so, particularly the SEC. For long-term shareholder value, it is important that activists have room to act.
Why small-cap companies should communicate with long-term shareholders – but not pander to short-term retail traders
Small-cap companies may feel that they are increasingly at the mercy of retail traders, who can be particularly boisterous on social media and demand frequent updates from management. However, firms should not feel too much pressure to engage, and should instead focus on communicating effectively with long-term shareholders, according to IR Magazine. Short-term retail holders can prove a costly distraction. There is no shortcut to serving investors over the long term – and whilst Twitter may move quick, traditional IR methods including shareholder letters and earnings calls are not going anywhere.
SoFi stock tumbles as earnings published ahead of schedule
Bad numbers take longer to add up, or so the old stock market adage has it; earnings that are released late are often profit warnings. However, earnings that are released early can be bad too. SoFi accidentally released its first quarter results early as reported by CNBC, which led to the shares falling sharply and a halt in trading for three hours. The company said the report, which was scheduled for after market close last Tuesday, was released early due to human error. The shares were down more than 18% when trading was halted at 11:19 a.m. ET, but trimmed losses to 12% after trading resumed shortly after 2 p.m.
Grindr SPAC
With its fanciful predictions, the Grindr SPAC will be a reminder to many IROs of the wonderful latitude enjoyed by their peers from the blank cheque world in making bold claims. The investor presentation must surely contain the most astronomical estimate of a total addressable market ever seen during a listing process; Grindr’s prediction of a $14 trillion total potential market is predicated on the economic output of the world’s projected LGBTQ population by 2026. BREAKINGVIEWS has flagged this as one of the deal’s eye-catching features alongside data security, governance and conflicts of interest.
And finally … Meet the ‘anti-woke’ investor flying the flag for capitalism
A profile piece in The Telegraph this week spotlights hero/villain of the investment world Vivek Ramaswamy, whose unique approach to asset management centres around screening out those companies which champion political causes and only investing in companies that prioritise profit. His new venture, Strive Asset Management, markets itself as being ‘anti-woke’ and rebelling against the increased politicisation of peers like BlackRock and Vanguard, who are using client funds to ‘foist policies… that most of their own clients disagree with’. This comes after Terry Smith flagged similar concerns earlier this year with his famous put down (of Unilever) that mayonnaise doesn’t have an ESG purpose. As the debate around whether to embrace ESG or not continues, Ramaswamy is quickly becoming the Robin Hood of the anti-woke asset management world.
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