Perspectives on IR from Fidelity and Wellington

By Dominic Jones

THE NIRI virtual chapter, which caters to IR professionals around the world who are not served by a local NIRI chapter, continues to impress me with their professional development programs and events.

Last week, they held an hour-long webcast titled The Pulse of the Buy-Side: Expectations and Best-Practices Advice. It featured two experienced fund manager/analysts:

• Kenny Abrams, Senior VP and Equity Fund Manager with Wellington Management; and,
• Matt Sabel, Co-Sector Leader and Fund Manager at Fidelity Investments.

It’s always useful to hear the perspectives of fund managers and analysts, and this event was rich with useful tips and insights. Here are some highlights I noted from the webcast:

• Don’t cold call fund managers or buy-side analysts to pitch your company. They don’t like it. Tread lightly and do no evil.
• If a fund holds your stock, be proactive and follow up.
• If you’re meeting with fund managers, be well prepared and scope out what investors want to talk about before hand to be sure you have the right people and information available.
• Respect fund managers’ time. Don’t be late.
• Overly protective IROs, especially those who interrupt and cite Reg. FD in one-on-one meetings with management, are a pain in the neck. Analysts and portfolio managers understand the constraints.
• New IROs need to earn their stripes. They need to know their companies well and not get in the way of existing relationships that a portfolio manager might have built with company managers over many years.
• Management credibility is built over time. Credible managers are even-handed in their assessments of both the good and bad at their companies. Even in great quarters, they talk about the things they want to improve.
• CEOs need to be visible in good times and bad. It’s not good when a CEO takes credit in good times but defers IR to the CFO in bad times.
• Executives who are preoccupied with their stock price are a red flag. Fund managers want managers to be focused on running the business over the long-term.
• Executives and IROs who take it personally when a fund sells their stock are an irritant. Companies should not worry about who is buying and selling their stock. They should just keep telling their story because a seller today could be a buyer again down the road.
• Analyst days where fund managers can hear from several line managers are a hit. However, fund managers don’t have time to attend a lot of them. Companies outside of the main financial centers should hold analyst days in New York or Boston.
• Visiting fund companies’ offices is a good idea because it can expose your company to a variety of analysts and portfolio managers who may have different investment approaches.
• Long-only fund managers are concerned about the questions they ask at group meetings where hedge funds are present. They don’t want hedge funds front-running their trades.
• Often a fund manager who holds your stock will attend your presentation at a conference just to hear what questions other investors are asking.
• Big fund companies have proxy departments that handle voting at annual meetings. Companies should be proactive in reaching out to explain their positions on controversial issues early on in the process, not a few days before the poll closes.

A MP3 (26.0 MB) and transcript (PDF 184 KB, 21 pages) are available.

Related posts:

1. Sell-side research reports now in XBRL
2. NIRI 2008 conference goes 2.0
3. NIRI’s earnings guidance survey makes no sense
4. US IRO pay figures released
5. NIRI members’ discontent posted on Web

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