The importance of staying in touch with investors: Corporate Access
7 August 2013
Earlier this year, I attended Bank of America?s (BofAML) IR Insights Conference. ?After returning from the conference, I shared some highlights from a session called: ?An Analyst perspective on what makes an effective IRO.?? One of the topics that the panel focused on (and that I discussed at length in the post) was Corporate Access.
During one of my networking sessions in New York, I met and subsequently had a very interesting conversation with Arin Amanda Prisand, Head of Corporate Access, Americas, Mizuho Securities USA Inc. As a former IRO and consultant, I feel IROs should know more about Corporate Access because it is a particularly important offering. To that end I thought you may be interested in hearing her thoughts on how you can maximize working with Corporate Access.
Before delving into the interview, I want to state that I derived the title of this blog from a document that Arin co-authored in January 2013, ?Staying in touch,? which talks about the merits of regularly meeting with investors. This quote from that article encompasses the tone of the interview:
?Actively pursuing a corporate access strategy positions a company for brighter economic times. It also satisfies investors? very real need for information during dark days. In this environment, the buy side wants to be kept even more closely abreast of developments. Wooing investors improves a company?s credibility, while increasing liquidity, which lowers the cost of capital and improves a company?s market value.? ? John Bai, Head of US and Asian Equity Sales for Mizuho Securities USA.
1. Tell us a little bit about yourself and Mizuho Securities USA Inc. (?MSUSA?)
Mizuho Financial Group is one of the largest financial groups in the world. We have about 56,000 employees, 920 offices in 30 countries and over two trillion dollars in total assets. MSUSA is a subsidiary of Mizuho Financial Group. We have US analyst coverage in Healthcare, Technology and Energy verticals.
My background is pretty diverse: I?ve worked for two CEOs; sat on a proprietary trading desk: and worked at a hedge fund for five years. I was an equity research sales person for two years, and I?ve been in corporate access for over four years.
I?m always trying to see corporate marketing from every perspective- having attended the meetings, prepared for the meetings and sold the meetings. As Head of Corporate Access Americas, I work with bankers, analysts, sales teams and corporate clients. Mizuho has a variety of business relationships around the world. At the end of the day, we are providing high quality service and trying to do the best job for our clients.
2. Can you provide some background on how you work with companies and your internal teams to arrange meetings with management?
Due to the deep relationships that our sales teams and analysts have with investors, some of the meetings are buy-side driven. In this case, we try to bring the companies that investors are most interested in seeing to their doorstep. 40% of our marketing in 2012 was with companies that we do not cover from research. These companies range in market cap, and the marketing is very much based on buy side interest. In order to do this, I build my own relationships and try to leverage the bankers? relationships. Sometimes an analyst will introduce me to companies that he or she is covering, and then I will work to secure the corporate marketing. I like to learn about each company?s IR outreach program so that we can market them in a manner that is most strategic and beneficial.
Most of our events are to service our existing corporate clients, demonstrating our firm-wide capabilities. The main goals of the meetings are to introduce our clients to investors, create a productive day, feature and expose them to investors around the world. We always provide feedback to help them improve their story telling.
3. Can you discuss any trends with respect to meeting requests for international companies? For example, have you seen any increases/decreases in requests? Pre/post the crash of 2008?
Our corporate access team is responsible for all companies headquartered in the Americas (Latin America, Canada and the US), and we arrange meetings wherever our clients want to go. If an American company is marketing in the US, Brazil or Japan it would come through our desk. There is another department to work with Japanese corporates marketing in Japan or the US/Canada.
Since the recent changes in Europe and the availability of information, I am seeing a big increase in the Japanese and Latin American investor interest in US corporations. They want to put their money to work here, whereas traditionally they were only investing in their own domestic companies. In response to this growing trend, we are inviting global corporations headquartered in the Americas to participate in our annual Mizuho Investment Conference in Tokyo for the first time this September. This year we are expecting 250 companies at the conference, and we are hoping to have about 10 from the Americas.
Similarly to marketing to investors in the US, marketing overseas requires repeat meetings with the buy side. In order to be successful, corporates have to invest in a well-planned, international IR program. Since Mizuho is headquartered in Japan, we have deep relationships with Japanese investors and introducing US corporations to them is one of our strengths. Conference calls and virtual meetings are a great way to test the international investor market and learn whether or not a corporate should make the trip overseas.
4. Do you have any best and worst case scenarios of dealing with IR?
The best-case scenario is when an NDR is planned well in advance so that we have the maximum amount of time to market the event to the investor community. It?s important that the IRO tells us who from management will be representing the company, and that it doesn?t change. Having a really open and honest dialogue with the IRO is best. I like to work with IRO?s who are open to seeing accounts they may have never heard of and who are ready to answer tough investor questions. IRO?s may see accounts that haven?t bought their stock yet and may see those investors multiple times. It is important to continue to try to build that relationship. A best case scenario is when an IRO trusts us to put a good schedule together, and they are open to learning about the investors we are putting in front of them.
The worst-case scenario is when a corporate cancels without a reason, especially last minute. This is a real red flag for investors, and it?s something that our sales team has to then communicate to the investor audience. We always try to portray the company in the most positive light, and a cancellation requires us to give difficult explanations.
5. Any advice or ?best practices? you can share with IROs to ensure their meeting is a success?
Knowing your audience in every meeting is always very important. At Mizuho we give Corporate Briefing Books to every company who markets with us. These books include investor profiles so the corporate can learn the investor?s holdings, the investor?s knowledge level and the IR investment style. Often times, we provide anticipated questions from the buy side ahead of the meetings so that IRO?s can be prepared with the best answers.
Additionally, IROs need to be ready to address concerns. If you meet with somebody who is short your stock, for example, try to understand why. Then, take their negative points to address concerns in your upcoming meetings. The story is not always going to be perfect or positive.? But, if you address the concerns, the investor will see that you have a legitimate strategy and execution plan in place. At the end of the day, transparency is key.
I also think that using the sell-side is crucial to hosting successful and efficient marketing. We all know that companies can reach out directly to investors to schedule meetings, but when IRO?s do that, they are often putting the investor on the spot. Investors feel that have to accept the meeting even though they may not really be interested. When you use the sell-side, this can be avoided. If an investor is not currently working on that stock, or researching your sector, or really just isn?t interested, they can more easily decline. The sell-side acts as a filter ensuring that the meetings you have are with investors who are genuinely interested in spending the hour learning about your company.
6. What are companies using to tell their story? Are they using PowerPoint? ?How does Mobile fit in?
At large presentations, investors should be able to download the PowerPoint, look at it on their iPad or grab a hardcopy of it on the way to the meetings. At a smaller non-deal roadshow, presentation delivery should be based on the type of meeting and how many people are attending. Primarily, it depends on the investor?s knowledge level of the company. During a meeting with an investor who wants a deep dive and who is well versed in the company?s story, the PowerPoint may not even be used. On the other hand, you may look at every page of a PowerPoint with an investor who you have never met. Technology, in a 1×1 or in a large group meeting, needs to fit with the needs of the audience and the discussion. However, I suggest offering as many easy ways as possible for investors to receive the information.
In the past we gave out Investor Briefing Books and Corporate Briefing Books at our conferences. Every investor received a profile on the companies they were meeting and vice-versa.? Going forward, we have decided to stop distributing hard copies of the Investor Briefings Books about the companies. Instead, we are sending e-versions. We will continue to provide the customized Corporate Briefing Books in hard copy.
7. What about advice for smaller companies with no coverage?
I suggest participating in as many conferences and non-deal roadshows as possible. Small companies should be patient. If they have a light schedule, maybe only three meetings, they should host those meetings as a way to start to ramp up those relationships and practice being on the road. They should also be okay, and I know this is not what they want to hear, but they should be okay if the meetings they take are tangential. If the investor is meeting with you because they want a read on another company you should do the meeting anyway. You could become a resource for that investor. Ultimately, the investor will get to know that you are knowledgeable and that your company is an interesting one. They may eventually pull the trigger and invest. You have to start somewhere. If the investor is not interested in your company at that moment, but wants a read on something else in your sector, take the meeting, build the relationship and become a resource. Of course, you can?t expect to have 15 meetings if you only have two sell side analysts. Manage your expectations, and know that opportunities will grow over time.