IR Monitor – 3 January 2024

In this week’s newsletter:

In this week’s newsletter:

• Who was the best CEO of 2023? The Economist measures up the business world’s top dogs based ranked on the returns they generated for shareholders relative to the sector average.
• Investor days are getting punchier, more incisive and entertaining: how to put on a compelling investor day in 2024, according to IR Magazine.
• FTSE 100 dividend forecasts for 2023 and 2024 have both fallen by 10%, warns Investment Week, even though total cash pay-outs for the index’s one hundred stocks in aggregate are set to remain steady due to strong share buyback activity.
• CNBC reminds us that the ability to extract important numbers quickly, and perform analysis on financial narratives, has been seen as one of the most promising applications for chatbots ever since ChatGPT was released late last year. But on the contrary, GPT and other AI models can’t analyse an SEC filing, new research has found.
• We could be entering the year of the IPO, whispers The Times. A 2024 comeback of the IPO market  would be good news for the IRO market too.
• And finally … attack of the naked short sellers: a cautionary tale from Forbes. 

This week’s news

Who was the best CEO of 2023?

The Economist comes out swinging with their year-end review of S&P 1200 CEOs, ranking them by the returns generated for shareholders relative to their respective sector average. With newer CEOs (tenure shorter than 3 years) and macroeconomic outliers excluded, there was nowhere to hide…gulp. The shortlist included companies from the tech, industrials, pharmaceutical and financial sectors. After a brief analysis of employee and customer satisfaction, Nvidia’s leather-clad Jensen Huang emerges as the clear winner… One hopes The Economist’s rankings prove a better predictor of a company’s fortunes than Forbes’ 30 Under 30. 

Investor days are getting punchier, more incisive and entertaining

Do you remember what investor days looked like pre-pandemic? Filing into a real-life room with other real-life people is so old-school: Tim Human from IR Magazine has the lowdown on how compelling investor days in 2024 will use “shorter formats, crisper messaging and higher production values.” As one of the case studies for the article, Human speaks to Bombardier’s VP of financial planning and IR, who notes the now-compulsory nature of snazzy corporate videos, aesthetic behind-the-scenes shots, & the need for investor days to deal with an online audience’s reduced attention span. IR and Marketing teams are working closely together to bring people inside the company – both literally & figuratively – to really help attendees understand what a company is all about. Bringing the Company to life and standing out from peers with an incisive event has never been more important.

FTSE 100 dividend forecasts for 2023 and 2024 have both fallen by 10%

Russ Mould at AJ Bell warned that the FTSE 100 has continued to “paddle sideways” as the index is “no higher than 12 months ago, or indeed six years ago.” For Investment Week, AJ Bell analysts have stressed that they expect a new all-time high for aggregate FTSE 100 pre-tax profits in 2023 at £250.7 billion, a 9.5% increase over last year. Analysts forecast that the healthcare sector will grow the most with firms such as AstraZeneca & GlaxoSmithKline leading the charge. However, dividend forecasts for 2023 & 2024 have both fallen by 10%, as profit estimates for Banks, Miners and Oil & Gas companies have recently dropped due to an expected easing in interest rates policies. This is in a context where dividend growth and pay-outs in the UK are still highly concentrated to a few key stocks such as HSBC and Shell.

AI fails to make sense of SEC filings

Researchers from US-startup Patronus AI found that Large Language Models (LLMs) frequently fail to answer questions derived from Securities and Exchange Commission filings and that they often “hallucinate” figures that were not included in the given filing… So, beware of copying and pasting answers just yet! Patronus’ research found that OpenAI’s latest model, the GPT-4-Turbo, only got 79% of answers correct during testing. CNBC noted that LLMs could have huge potential to “help people in the finance industry” but for now we still need that ‘human touch’. The time when bots will accurately summarise lengthy filings remains in the future.

2024: The Year of the IPO?

The City seems to be abuzz with news that the IPO market might be heating up again as we enter 2024. The Times lists Boots, Starling & Monzo as the main potential RSVPs to the IPO party this year. As inflation and interest rates begin to fall, it seems that companies may afford to turn an eye towards long-term growth and the prospect of raising capital from institutional investors. While the growing consensus is that 2024 could be the comeback year for IPOs, there are still clouds on the horizon, not least because of upcoming elections in the US and UK. In addition, potential IPO candidates on the LSE are reminded that listing on a stock market is good, but performing in line with expectations post IPO is critical to survive as a listed entity. 

And finally … Attack of the short sellers

For those of us still recovering from the holiday period, Bob Ivry and Brandon Kochkodin at Forbes have written this entertaining comic-book retelling of Torchlight’s failed MMTLP project, which the SEC ruled on last year. Featuring ‘naked’ short sellers, the story is a cautionary tale against herd mentality and the risks faced by trade-at-home investors. The brief comic warns that some corporate executives may be poised to take advantage of the meme stock momentum to fool retail investors while making a scapegoat of short sellers in the process. Perhaps a great way to get the kids interested in financial markets before they head back to school?* 

*Probably not, but worth a try.

We at the IR Monitor wish you a Happy 2024, where we’ll continue to bring you the best of  IR news

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