IR Monitor – 5th October 2022

This week’s news

Nine top tips for direct engagement

Direct engagement between IR teams and portfolio managers is increasingly becoming the norm, often facilitated via buy-side corporate access. But how should IROs keep pace with this changing landscape, asks IR Magazine in their latest best practice report? Gone are the days of peaks and valleys of investor engagement, with the most proactive professionals now available outside of the once familiar calendar of in-person non-deal roadshows to field questions and fulfil meeting requests – often at short notice too. Put simply, the most successful IROs are those embracing the ‘always on’ trend sweeping the industry. What’s more, the post-pandemic and tech-enabled ‘new normal’ has ushered in a new era of investor outreach, in which virtual meetings and customer management tools offer new avenues for IR professionals.

US IPO market set for 30-year low

A new report from Renaissance Capital suggests that the US IPO market is on track to raise the least amount of money in 30 years, after only 25 IPOs during the third quarter of 2022. The Institutional Investor reports that the proceeds from this period ­- $2.4 billion – are the lowest since late 2008, at the advent of the global financial crisis. Venture capital and private equity firms have kept a wary distance from the market this year, significantly driving this slowdown. Likewise, after a boom in 2020-2021, issuance of SPAC IPOs are at an all-time low, in part due to regulatory uncertainty and merger terminations. The report also mentions that a large portion of Q3 IPOs in the US came from Chinese companies, following an agreement on the alignment of audit practices between the two countries. However, once listed, many shares are struggling to stay afloat, as shown by the 96% drop in the WeTrade Group stock since listing.

Is it time for a Capital Markets Day?

Holding a Capital Markets Day, or Investor Day, is a big commitment. But it shouldn’t be something for businesses to shy away from, says Forbes – even if it means battling with time constraints and regulatory concerns. For their part, investors appreciate the chance to engage with a company outside of the imposed calendar. And for businesses, a CMD can be an excellent opportunity not only to defend decisions, but to take the reins and actively reinforce messaging by bringing together key contributors to the equity story. However, for this to be successful, adequate planning and resourcing is non-negotiable. Hiring the right partner to help navigate the opportunity is a sure-fire way to ensure that the right signals are sent, the article underscores.

Several US companies downplayed their 2022 H1 earnings, report finds

As reported by Institutional Investor, research firm New Constructs suggests that some of the largest US companies intentionally understated their earnings in the first half of 2022. New Constructs reports that in the 12 months ending June 2022, GAAP earnings, which include the impact of non-recurring write-downs, were 3% lower than core earnings. For comparison, GAAP earnings were 4% higher than core earnings in the previous quarter. New Constructs diagnoses this emerging trend as a symptom of tanking markets, with the research firm’s CEO David Trainer arguing that the understatement of earnings “implies that corporate executives are worried about the earnings outlook in the coming months”. Trainer adds, “companies tend to overstate earnings in a good market cycle and understate otherwise. They might as well take their lumps now and set up for when the market is more sanguine”.

Stakeholder capitalism poisons democracy, argues Vivek Ramaswamy

Vivek Ramaswamy, self-styled poster boy of the anti-ESG movement, claims in an op-ed for the Economist that the definitions of stakeholder capitalism and ESG “have been diluted by their greatest champions”. Ramaswamy suggests that by using the term ‘stakeholder capitalism’, companies can rake in the political and economic advantage brought about by the term’s associations with ESG, whilst not operating any differently than they would under “plain old capitalism”. Highlighting what he sees as the need to “assiduously disentangle” democracy and capitalism, Ramaswamy argues that it is citizens, not corporate chiefs, who should tackle social issues.

And finally… Valmet brings IR to Instagram

“We want to make it easier for people who don’t spend their whole professional life following profit-and-loss statements,” says Valmet’s IR Director, Pekka Rouhiainen. Finnish technology provider Valmet was awarded the IR Magazine prize for best retail investor strategy, in part for its innovative use of Instagram to communicate with its 57,000+ investors. Launched in 2020, Valmet’s IR Instagram channel was designed to facilitate a two-way dialogue between the company and its shareholders. Instagram’s Q&A function has allowed Valmet to turn the traditional investor ‘town-hall’ into a more informal, digital space. Rouhiainen says, “It replicates these events where there are optimally 100 people present. You talk more freely,” he explains. “It has worked really well and the engagement has been excellent.” Further differentiating its IR offering, Valmet make use of other social media too..

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