More Companies Meeting with Hedge Funds and Sovereign Wealth Funds, According to BNY Mellon Investor Relations Survey
strategies to enhance their outreach to hedge funds and sovereign wealth funds, according to an annual survey conducted by BNY Mellon, the global leader in asset management and securities servicing. In another key finding, the study reports that 22% of firms are weighing a secondary stock listing to attract investors in high growth markets, most notably China and Hong Kong.
Developed as a benchmarking tool for BNY Mellon's depositary receipt clients, the survey, Global Trends in Investor Relations, looks at how publicly traded companies are managing their IR practices – from guidance and disclosure policies to sell-side approaches to the growing use of social media tools. The survey was conducted during July and August 2010 and features input from nearly 400 companies across 47 countries. Respondents run the gamut of market cap, region and industry, including financials, technology, industrials, consumer staples and energy.
"We're seeing companies truly act more globally to raise their IR profile, from the time spent with hedge funds and sovereign wealth funds to the burgeoning use of secondary listings that target regional high growth markets," said Michael Cole-Fontayn, chief executive officer of BNY Mellon's Depositary Receipts business. "IR officers are making a commitment to give fair and equal access to all investors, no matter who or where they are, to make sure they have the best information about their company."
Key findings for the Middle East:
Investor relations professionals typically have 7.4 years of experience in IR although Middle East and Africa (EEMEA) IROs average 6 years. North American firms employ more seasoned IR professionals with an average of 9.1 years in the profession.
In the Middle East, over the past five years 80% of those surveyed had visited Dubai, with over 65% having visited Abu Dhabi. Just under 20% of those questioned had visited Doha and Kuwait City, with Riyadh behind.
Going forward, investor relations professionals believe the Middle East (13%) is one of the top four regions to visit. North America (58%) and Europe (45%) are the two most important regions for their company to visit in the next three years.
Other key findings include:
93% of all companies meet with hedge funds, versus 89% in 2009; 24% of a firm's investor meetings are with hedge funds, up from 16% in 2009
47% of all companies currently meet with sovereign wealth funds and an additional 23% are considering meeting with them. Western European companies are the most likely to meet (56%) or consider meeting (44%) with SWFs, whereas North American firms are the least likely (30% and 18%, respectively)
Nearly a quarter (22%) of companies worldwide are considering a secondary listing outside their home market. Among these companies, the large majority (70%) identified a listing in Greater China (Hong Kong or China in general) of strategic interest
The most common reasons for not meeting with a hedge fund are lack of information on a fund's strategy (34%), shorting risk (31%), and amount of time required to meet with this group (29%)
82% of companies provide guidance, especially those in Western Europe (89%) and North America (86%). Notably, guidance policies largely have not changed over the past year, with the exception of EEMEA firms, where 33% have increased the amount of guidance offered.
On average nearly four (3.7) U.S. road shows are held by a company, with North American firms holding the most (7.1) in a given year and EEMEA companies holding the fewest (1.6).
"This year's survey provides valuable insights into how issuers allocate their resources and communicate with investors and analysts in light of the current market," said Peter Gotke, Vice President, BNY Mellon's Depositary Receipts, based in Dubai. "There's clear optimism in terms of investor outreach opportunities in 2009. We look forward to helping issuers capitalize on this and gain greater visibility within the international marketplace."