IR Monitor – 28 February 2024

In this week’s newsletter:

In this week’s newsletter:

• One foot in the boardroom: how reporting can keep IR close to the top. IROs seeking a seat at the table should emphasise their direct connection to shareholders, argues IR Mag
• I read all 59 of Warren Buffett’s annual letters. The best parts as selected by the WSJ
• What is the point of proxy fights? asks the Financial Times. They are wildly expensive, extremely divisive and go on for too long. And even if you win, you lose
• Indivior: another company planning to move primary listing to the US. Alex Brummer, writing for The Daily Mail, blames asset managers in the UK
• Why competitive pay is a big problem for London: Robert Pickering talks to Bloomberg
• And finally … the epidemic of typos

This week’s news

Reporting can keep IR close to the top

IROs are the segue between the boardroom and investors. When thinking about serving the investor community and ensuring the board is fully aware of the latest market sentiment and views of the shareholder base, the question of how involved IROs are is an important one. Last week, IR Magazine shared the thoughts & opinions of IROs from different industries, with a clear view across sectors: close communication between IROs and boards is essential & it often depends on the quality of direct connections that the IRO has with shareholders. It is a crucial partnership for gathering the most informed understanding of shareholder sentiment. Comms leaders across the investor space mentioned that IROs may have more comprehensive knowledge of industry activities and external factors that can affect shareholder sentiment, such as geopolitics and macroeconomic trends. The key takeaway from this article… if there isn’t already a close relationship between an IRO and the board, then there should be.

I read all 59 of Warren Buffett’s letters

Warren Buffett… an investor who needs no introduction, not least because he developed a simple yet effective communications strategy to investors over a number of decades. Keeping it short yet clear. Over the weekend, the Wall Street Journal released a summary article which captures some of Buffett’s most memorable letters, with this correspondence stretching back to 1965. Buffett’s letters are a reminder to senior leaders across the industry of the effectiveness of close communication between company leadership and investors. His letters draw on a variety of real-life analogies yet contain a clear and concise message to shareholders. The analogies range from comparing investing to a game of baseball, ‘riding the wave’ of economic prosperity to other wise words from the seasoned investor. One thing is clear in each of the letters: clear and concise correspondence between a company’s leadership and shareholders is an effective communication tool, best illustrated by the longevity of Bershire Hathaway as an organisation.

What is the point of proxy fights? 

Proxy fights, are they worth it? This week, in the Financial Times, William Cohan shares his opinion on what he views as a ‘widely expensive’ and ‘extremely divisive’ process. He observes it is a process that takes a long time from start to finish. His examples look at the cost-to-benefit ratio of a proxy fight; if you win two seats in a 12-member board of directors, you may have gained two seats, but you risk antagonising the rest of the board. Whilst some would suggest a proxy fight allows shareholders to address issues that the board of directors may have overlooked, the article refocuses the spotlight on whether proxy fights are truly in the interest of companies and shareholders. Only time will tell whether 2024 will see an increase in proxy fights, or if Cohan’s words start to ring true and we see fewer of them.

Another company planning to move its primary listing to the US

Indivior’s shares went up more than 20% on the day it announced its intention to move its primary listing from London to New York, as reported by the FT. This is at odds with AstraZeneca & GSK which recently reaffirmed their commitment to the UK equity capital markets. Life sciences are highly regarded as a leading-edge sector with a reputation for excellence in the UK, according to Alex Brummer from This is Money. Whilst evidence suggests a primary listing change rarely boosts value, Indivior’s decision reflects the recent trend of UK-listed companies struggling to find support from British holders, with American investors often dominating shareholder registers. With Indivior’s first UK shareholder appearing in 15th place on the register, with only 1.32%, Brummer argues that this highlights the lack of support from UK long-only investors. He further suggests that UK long investors lack risk appetite and fail to prioritize the national interest, thereby representing a “shocking indictment of UK asset management culture”.

Why competitive pay is a big problem for London – Robert Pickering 

In Bloomberg’s ‘In the City’ podcast, Robert Pickering, former CEO of Cazenove, discusses his book “Blue Blood: Cazenove in The Age of Global Banking” where he reflects on the London banking landscape. In doing so, he emphasises the drastic and unrecognisable changes to the City over recent decades, but equally suggests focusing on improving competitiveness rather than dwelling on the past wonders of the City. Regarding the deal-making drought, Pickering advocates for a steady approach rather than a panic, recognizing the cyclical nature of IPOs and M&A activity, and his advice is to simply “ride the wave”. He also identifies deeper issues contributing to London’s decline, citing regulatory changes that have weakened the equity market and led to a lack of sector-specific expertise, particularly in tech. He concludes that all of the above have resulted in a valuation gap and a price sensitive investor culture that deters companies and management. Additionally, Pickering addresses concerns about pay gaps, acknowledging that there are businesses where the market for leadership talent is global. Trying to recruit a CEO in this context has become increasingly difficult, with London pay simply not cutting it, especially when coupled with increasingly complicated regulations.

And finally … the epidemic of typos

Matt Levine’s Money Stuff newsletter revisits the comical chaos of corporate earnings releases, highlighting Lyft’s wild ride from a typo-induced stock surge to a modest correction, accompanied by a nonchalant “My bad” from the CEO. Meanwhile, Mister Car Wash and Planet Fitness joined the typo party with their own clerical errors, albeit with less dramatic market repercussions. Mister Car Wash wryly noted that while zeros may be harmless, stray minus signs can wreak havoc in finance, leaving all amused by the absurdity of it all. Levine concludes with a shrug, noting that while Mister Car Wash and Planet Fitness also stumbled with their typos, their blunders didn’t spark the same trading frenzy as Lyft’s did. He suggests there’s not much actionable insight to glean from these mishaps but finds solace in the fact that Lyft isn’t the only one occasionally fumbling over press release details.

Contact Us

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].