IR Monitor – 29 January 2025

In this week’s newsletter:

• To increase shareholder loyalty, understand what matters to them suggests the Harvard Business Review. Shareholder profiling may be the answer
• Companies should step off the quarterly report treadmill: an op-ed from the FT in the opinion of which the current system is burdensome and damaging to market dynamism
• Britain’s brokers are diversifying and becoming less British: The Economist on the London stock market and the peculiarly British phenomenon of corporate brokers
• The IR Society on the year ahead – your FTI correspondent attended this webinar
• Heads of Investor Relations should understand their company better than management, according to IR Magazine, in an interview with the CFO of Alamos Gold
• And finally … PR is key to activist investor battles writes Simon English. Elsewhere, FTI will be co-hosting a webinar with Bank of America on trends in US activism

This week’s news

To increase shareholder loyalty, understand what matters to them

As shareholders are continuing to shorten their holding periods in companies – the average holding period of shares dropped from eight years in the 1950s to just 5.5 months by mid-2020 – investor relations have never been so crucial. Harvard Business Review suggests that shareholder profiling may be the answer: leveraging analysis of shareholders’ preferences and behaviours in order to tailor IR efforts and build a loyal investor base. This includes analysing how shareholders are investing and voting, who investors represent, as well as the social and political networks of fund managers. Machine learning tools can be used to streamline shareholder data analysis, and enable comprehensive 360-degree profiling. Effective shareholder profiling identifies aligned shareholders, fosters loyalty through targeted communication and helps attract like-minded investors. This ultimately enhances shareholder relationships, thereby empowering businesses to implement corporate strategies which will create long-term value for their shareholders.

Companies should step off the quarterly report treadmill

The routine of pouring all available resource into an upcoming quarterly reporting deadline is familiar to most in the industry. However, CEO of Norges Bank Investment Management, Nicolai Tangen, writes in the Financial Times that the fixation on short-term profits is actually damaging market dynamism. Frequent reporting can create a hyper-fixation, in fact, on short term profits, obscuring the long-term investment journeys that new industries looking to drive future economic growth need, whilst being resource-intensive. Sectors like clean energy and biopharma need strong initial investments so they can invest heavily in research and development, without having to worry about meeting quarterly profit targets in the short term. However, these sectors are not the only ones to benefit from less frequent, bi-annual reports.  Reporting requirements for smaller companies and start-ups are often costly and reduce their access to capital, which is pivotal during their early stages of development. Major markets, including the EU, UK and Singapore have already moved away from mandatory quarterly reporting – should this be the habit we kick in 2025?

Britain’s brokers are diversifying and becoming less British – Economist

Existing only in the UK financial system, corporate brokers have long represented the unique nature of the City of London. Moreover, they have served as a bridge between founders and investors, at the fraction of a cost of an investment banker, instead relying on their strong relationships. And just as the City is struggling to attract companies to list on the LSE, the brokers are struggling to find new business. While we all await the return of companies and business to the LSE, brokerage firms are having to diversify their income. Some have merged, such as the Panmure and Liberum, whilst Peel Hunt has opened an office in Copenhagen and is expanding in America. But not all hope is lost with the rumoured revival in dealmaking in 2025.

The IR Society on the year ahead 

In a recent webinar, the IR Society explored what 2025 might hold for IR. The key message? Companies need to lead investors, rather than the other way round. Over the last few years, capital markets have changed dramatically, and some companies have been left behind.  As investors are faced with an explosion of choice thanks to an increasingly global market, it is up to businesses to change the language of their equity stories to get to the front of the queue. This could include a transition for British companies who have typically focused more on dividends than their U.S. counterparts to a focus more on buybacks in order to compete in the global market. Furthermore, as recent activist cases have been explicitly critical of companies’ equity stories, IR professionals must consider how their narrative can help mitigate risk. Against a background of slowing global growth, coloured by uncertainties surrounding US trade policy and geopolitical risk, 2025 must be the year of proactivity and clear direction for businesses. 

Heads of IR should understand their company better than management

This week the IR Magazine spoke to the CFO of Alamos Gold, Greg Fisher, about the unique role of investor relations in mining. Fisher emphasised the collaboration between IR and management to ensure clear, consistent messaging, especially during key events like acquisitions. Fisher noted his IR team’s impact during Alamos’ recent acquisition of Argonaut Gold, where strong communication helped the market quickly grasp the transaction’s value. During the interview, he stressed the importance of his IR team in having an understanding of the mining industry so they can deliver strategic messaging, which can be tailored to all investor types. He also noted the success of the team cannot be measured through KPIs, but instead through feedback from investors- informally and formally at investor roadshows, 1-to-1 meetings and conferences- as well as from the analyst community.

And finally… PR & activist investor battles

Journalists unsurprisingly revel in the drama of an activist investor story, most recently demonstrated by the media outpour following Saba Capital’s campaign to oust the boards of seven UK investment trusts. PR is essential in such power struggles, and reporters argue that they need more engagement. Ready to sink their teeth into the juicy details, journalists claim bitter disappointment when their attempts to speak to Saba CEO Boaz Weinstein were simply ignored or rebuffed by the company’s PR firm (which has offices in the US and Canada, but none in London). Critics argue that the absence of a local PR expert familiar with UK media weakens Saba’s position in this high-profile battle, as it leaves unclear explanations of Saba’s objectives and the CEO’s long-term intentions versus short-term profit motives. Earlier investment in local expertise might have enhanced its influence and credibility in the UK market.

Register: 2025 Activism Outlook Webinar

As the 2025 activism season kicks off, join FTI Consulting on 4 February 2025 for a webinar co-hosted with Bank of America and Kirkland & Ellis, where three top activism defence leaders will discuss key strategies to keep clients ahead of the curve.

Read more and register here.