Like all investors, for Heinrich Ey, director and co-chief investment officer for German and European mid/small caps at Allianz Global Investors, corporate access is about meeting with management. ‘We do want to speak to the CEO and the CFO,’ he tells IR Magazine.
But there are also IR professionals who make the cut, he adds. These IROs stand out for their longevity in their firm, with Ey talking about some having been in place longer than management.
‘They really know the business inside out,’ he notes. ‘They know how to talk to markets, know what the questions mean and are able to give good answers – in a similar way to management. You can feel whether an IRO is close to management or not.’
Bring out the second line
What Ey, a regular judge at the IR Magazine Awards – Europe, also values is that second line of management, citing a deeper dive as a draw when asked what gets him out and meeting in person in the age of virtual.
‘One obvious thing is whether [an event] is easy to reach: sometimes you get invitations to site visits, which are interesting, but are so difficult to reach that it doesn’t make sense to travel,’ he explains.
These, he says, feel like they’re aimed more at sell-side analysts who perhaps ‘cover eight or 10 names and have the time’ to dedicate to a single company. The European small-cap team at Allianz holds more than 1,000 meetings each year with companies, he points out.
With an active-only approach to his small-cap picks, Ey stresses the focus on ‘quality, growth business models’. And if you are going to put the time in, he continues, it should be real added value, with companies delivering something beyond a couple of hours – Ey suggests a full day: a capital markets day combined with a site visit, perhaps – as well as really mining the management bench.
‘Bring out second-level management,’ he recommends, adding that by talking to these managers, you often get a real feel for what drives a firm. ‘Give us some insight into departments, into sites, if possible. Give us a feel for the DNA of the company.’
Should I stay or should I go?
Ey concedes that, in an age where virtual can be so easy and efficient – not to mention environmentally friendly – in-person meetings increasingly take the back seat, despite acknowledging the value on offer.
IR Magazine’s Global Roadshow Report 2023 points to a continued shift back toward face-to-face roadshows following the lifting of Covid-19 restrictions. At the same time, though, it also shows that small-cap companies continue to hold more virtual roadshows than their larger-cap peers: among the small caps surveyed, more than one in 10 (11 percent) hold virtual-only roadshows, with 40 percent mixing online and in person. This compares with just 6 percent being virtual-only at large or mega-cap companies.
So how does Ey decide when to go and when to meet online? ‘Most often, the schedule decides because time is very limited,’ he concedes. ‘If you travel to these events – which are useful – you’re losing a day at least, so it isn’t always possible.’
Because of this, Ey says he actively tries ‘to limit attendance – maybe to two or three capital market days in person each year’, for example. As a result, the apparent greater focus on virtual among small-cap companies is an easy fit for him, especially at those companies where a relationship is already in place.
For those in the first-dates stage, Ey suggests companies offer education calls, noting the benefit for the retail bloc as well, where deep understanding as well as access will be harder to come by.
‘This is always something a company can improve on, if it has the resources,’ he says.
