IR Monitor – 23rd November 2022

This week’s news

How does IR become the strategic partner your C-suite needs?

In a webinar last week attended by FTI, IR Magazine discussed the ways that IR professionals can become a strategic partner to the C-suite, helping them build more robust relationships with shareholders. The discussion stressed IR’s role in helping executive teams avoid any blind spots and in setting them up for success by providing all necessary intelligence related to the company’s narrative. With various tools available to IR professionals, most notably AI, it’s easier than ever to leverage such information in building strategic relationships. The webinar concluded with one piece of advice: those in IR should have an informed point of view backed-up by data, which will give the C-suite confidence & conviction in the communication of strong & aligned messages.

Shareholder activism in Canada plummets to lowest level in five years

According to the 2022 Canadian Proxy Season Review, the number of shareholder activist campaigns targeting listed Canadian companies has dropped from 33 in 2019 to just eight in 2022, most likely accelerated by the Covid-19 pandemic. IR Magazine suggests that such reduction is linked to agreements being reached behind closed doors, before shareholders decide to publicly voice their concerns. Despite this, activists have seemingly still managed to achieve most or all of their targets seven out of eight times this year. Factors that were said to contribute to this success rate included activists’ increasing discipline, management teams’ fatigue through Covid-19, and the fact that companies may not have had enough time to recover from Covid’s impacts on their share price. Lastly, whilst campaigns focused in majority on governance, the review revealed that broader ESG-related campaigns are anticipated to be on the rise going forward.

US Companies still boosting capital spending despite higher rates

As it topped the $200 billion mark in the third quarter, capital spending by S&P 500 companies is expected to increase by 20% YOY in 2022 overall, according to S&P Dow Jones Indices. Whilst spending on some categories like property, equipment and technology is often welcomed by investors, and perceived as a sign of confidence, the Wall Street Journal highlights that investors are punishing companies that spend big sums on other projects with no clear rationale or return targets. Investors are looking for investments into projects that will pay off in the short-term, and have less patience in waiting for larger projects where cash flows are expected to materialise further away in the future. The article then cites META, which had to reduce its 2023 CAPEX guidance after a 25% single day share price drop. That was in sharp contrast with sectors currently benefiting from higher prices, such as O&G, where capex has been increasing dramatically. And whilst capital expenditure generally steps up in the fourth quarter, it might actually slow down in Q4 2022, along with share buybacks.

Energy stocks boosting global dividends to record highs in Q3

Investment Week reported on a new Q3 record for dividends as they reached $416bn globally according to the Janus Henderson Global Dividend Index. They are expected to hit $1.6tn in 2022, up 9% on an underlying basis and higher than previous expectations from the previous quarter. Surging oil prices were noted as a key driver of these record figures and, according to Janus Henderson, without growth from the oil sector the Q3 global total would have barely risen. The article also notes a strong quarter for UK companies with 84% either raising dividends or maintaining them. The article suggests, however, that moving into 2023 there may be some pressure due to slower global economic growth.

FTX’s Sam Bankman-Fried now says that ESG investing is a fraud

In a critical article on the events at FTX, the Wall Street Journal has commented on founder Sam Bankman-Fried’s criticism of ESG investing which he describes as a “fraud” that “has been perverted beyond recognition”. In an account of the failures at FTX, Bankman-Fried claimed that his firm became “overconfident and careless”. He had previously committed to making FTX carbon neutral and now argues that what is important is doing good rather than simply talking about doing good, or “using ESG language”. He criticises what he sees as attempts to say things just for public perception. The article then warns that these events should serve as a lesson for both investors and the wider public in how virtue-signalling can be used to hide certain things.

And finally… Alex comes to FTI

For over 30 years, cartoon banker Alex has poked fun at the business world, both corporate and institutional, from the pages of The Daily Telegraph. We are delighted to announce that Charles Peattie and Russell Taylor, the creators of Alex, will be visiting FTI Consulting on Wednesday 14th December in connection with the launch of their new book “The Best of Alex 2022”. The cartoonists have had plenty to write about this year, including Covid, Brexit and the impending global recession. Readers of the IR Monitor are welcome to join us at FTI to get a signed copy of the new book.

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