31 Jul WHAT’S THE STORY?
There are two fund managers, from my time as an in-house investor relations officer, who stand out for their approach to investment, and their styles could not have been more different.
The first, a younger guy, was meticulous about the detail. I remember one meeting started with him producing an obscure press clipping from his research into one tiny corner of the world where the Company was working. He wanted to know the latest progress report on the project, the cash flow position, the implications of local elections and the state of client confidence. Bearing in mind this was one of over 50 global projects, and not a particularly large one at that, it was a welcome 20-minute diversion from the usual Highlights, Balance Sheet, Cash Flow slides.
The second was a fund manager who had been around for years. Literally, and in investment terms. There was little he had not seen and he did not seem to concern himself with the detail much, if at all. He wanted to have a chat with the Chief Executive, look him in the white of the eyes, shoot the breeze and ask him where he was spending most of his time. It seemed akin to him wetting his finger to test which way the wind was blowing.
Both managers bought into the Initial Public Offering, which was by no means a forgone conclusion coming in February 2008 just at the outset of the credit crunch. They continued to be strong supporters of the business even as extrinsic events battered energy-linked stocks in London. I believe it was down to them not just understanding the financials of the Company, but to understanding its story.
They always made for the most enjoyable meetings, amongst 40 in a results roadshow week, when you find yourself constantly wondering if you are repeating yourself. I am not knocking the need for robust financial reporting and clear and concise slides that present the facts. But, that is just what results are, facts that have been delivered, old news. Any investor worth their salt should have a good grasp of the financials and a really good investor relations process should go beyond this; to deliver narrative and insight about a company, the people that run it and their vision for the future.
Grant you, it is easier said than done when companies are already juggling reporting deadlines, changing regulation and increased activism, not to mention the need to address how greater global uncertainty will impact their business. My advice to investor relations officers?
- Take every opportunity to understand the thinking of the management team, you should be a conduit for their vision.
- See the business for yourself, it was fortuitous that I had toured the aforementioned project only the month before, but I visited 75-80 per cent of our global projects and spoke regularly with operational staff.
- And last, but my no means least, work just as hard on the narrative as the numbers.
I guess my two favourite fund managers were more alike than I thought in that sense, they ditched the slide presentation and took the time to understand the real story. As investor relations professionals, we should do everything possible to aid that process.