The typical executive labors under the notion that his main job is managing the business. But more than ever, attracting and maintaining a broad base of investors is a crucial part of core business strategy. How do you balance running a company with the time demands of investor relations? One way to make the most of top executives’ IR minutes is by attending investor conferences.
‘An investor conference is absolutely the best use of management’s time, seeing more shareholders and potential shareholders in one setting than they possibly could anywhere else,’ asserts Joe Riccardo, senior managing director and head of the healthcare equity research group at Bear Stearns & Co.
Look at Bristol-Myers Squibb, he suggests, which made an unprecedented visit to a recent Bear Stearns’ conference. ‘It was a blow out, knock out, over-the-fence-three-times success,’ he declares. ‘They walked a couple of blocks from their headquarters to the Grand Hyatt, made a presentation, and did a break-out session. Then their IRO made wonderful use of his time by spending the rest of the conference meeting privately with over 50 investors. The stock went up around 10 percent over the three days.’
Now conferences are extending their reach even beyond the hundreds of investors who show up in person. Hambrecht & Quist, for example, ‘wordcast’ its semi-annual Internet investor conference in March, with anyone able to follow transcripts of panel discussions and company presentations in real-time while viewing live images on the Web.
The Wall Street Forum, which several times a year presents huge multi-industry conferences attended by fund managers, bankers and analysts from across the investment community, also began broadcasting the company presentations over the Internet last spring.
‘It’s a big deal,’ exclaims Gerald Scott, president of the Forum, explaining how a Web site has live audio and shows slides from the presentations. Investors can e-mail in questions, which are then read out so everyone can hear them – whether they’re on-site or on the Net.
Mixed Bag
Investor conferences are definitely not reserved for those companies making a splash with new investors. ‘Existing investors want to hear management restate their strategic vision, modified by recent events,’ explains Edward Keaney, head of research at San Francisco investment bankers Volpe Brown Whelan & Co. ‘Whether there were economic changes or regulatory changes, a company can reinforce its message by saying, This is our reaction, this is our strategy.’
Companies actually attend investor conferences for all kinds of reasons: ‘It’s a place to touch base with what others are doing – friends, competitors, vendors and customers,’ says Peter Cooper, president of Physician Support Systems, who presented at a Volpe Brown healthcare conference in New York recently. ‘You can find many different business opportunities here; maybe not actual business deals, but certainly good conversations. Of course, I have met a few new investors too.’
Many conferences are famed for the deal-making that goes on. Disney’s acquisition of ABC/Cap Cities, for instance, was first conceived at the Allen & Co media and entertainment retreat in Sun Valley, Idaho. Another elite affair is Bear Stearns’ annual Executive Forum for its largest investment banking clients – 45 top CEOs, their spouses, and Bear Stearns bankers eat together, ski together and square dance together. Every year mergers and other deals result.
‘They are a place for bankers to meet the CEOs of corporations which may do major deals in the future,’ confirms Pamela Cuming, Bear Stearns’ senior managing director, corporate marketing. ‘We put a tremendous emphasis on one-on-ones – private sessions between bankers and company representatives that happen outside of the formal presentations.’
Cuming’s frank assessment goes a long way towards explaining the impetus behind hosting investor conferences. After all, these events are not skimpy affairs: the price tag for a conference can run upwards of $500,000 for a three-day, 2,000-person event. Or consider for a moment the cost of hosting some 1,300 investors at the prestigious Waldorf-Astoria for the three-day high-yield conference in April – one coffee and a croissant will run you $11.50 at current Waldorf rates.
In the end, though, a conference pays for itself many times over via future deals, not to mention ensuing trading commissions from the investors who attend.
New Ideas
Indeed, along with fund managers and company managements, any investor conference is swarming with the host’s own salespeople, analysts and bankers.
‘We’re all there to learn and deepen our expertise,’ says Cuming. ‘A conference says to the world that this is an area where we’re very savvy and that we fully understand the dynamics of this industry. It’s both a learning opportunity and a chance to give out the message that we’re expert in that area, which fits in well with our whole banking strategy.’
As for the investors themselves, they too have varied motivations. Some come just to catch up with familiar names and faces. ‘We don’t come to investor conferences for new ideas,’ says Hans Utsch, New York-based president of the Kaufmann Fund, a $5 bn portfolio of some 300 growth companies. ‘We come to visit companies that we own, that we think we’re going to own, or that we have owned in the past. We just want to find out if there’s something we’re missing about companies we already know.’
Others may not be what they appear to be. One attendee at a recent conference confesses he’s a sell-side analyst from a firm which is setting up a competing brokerage sales operation. Another quietly admits he’s not from the fund management institution listed on his name tag; instead he’s a stock broker from a competing brokerage who finagled an invitation through a client.
‘I like to see a series of rapid fire presentations by various companies,’ says the mystery broker. ‘Instead of going out to visit companies all over the US, they come to me. I sit in one seat and visit with five companies in the course of an afternoon – two of which might be potential good ideas, and I might end up investing in one. There’s a level of uncertainty before any investment, but I can feel more comfortable in making a recommendation or putting my client’s money to work having met a company at an investor conference.’
Fund manager Utsch doesn’t much care about the prepared part of a company’s presentation. ‘It’s mostly break-out sessions that I attend,’ he says. ‘Sometimes I go to the main presentation just to get a refresher course and see if there’s something new from a year ago. But I always go to the break-out to ask the straight questions about what’s really happening.’
Volpe Brown’s Keaney notes a trend in the attitudes of institutional investors that augers well for the continued growth and popularity of investor conferences. ‘Many investors now prefer a much more public forum over one-on-one meetings,’ Keaney says. ‘Not only do they get the added benefit of other investors’ questions, but they’re more comfortable in the knowledge that management will be held accountable for any statements they make in front of a larger group of people.’
This trend indicates a slow but dramatic shift in the dynamics of investor relations. Where once fund managers vied for private audiences with top management, a new breed of wary investors and litigation-shy companies opt for group meetings. Instead of one-on-ones with investors, IROs can get the most mileage out of group meetings.
And where better to do that than at an investor conference?
Midwest Mania
While most conferences concentrate on one industry, many firms sponsor huge events that cross sector boundaries. Montgomery Securities in San Francisco does it, as does Alex Brown in Baltimore. But the biggest of the breed is the huge multi-industry conference held each June by Piper Jaffray.
Daphne Kamrowski, executive administrator and conference planner for Piper, says 229 companies presented before more than 1,200 investors and corporate clients last year, taking over the whole Marriott City Center in downtown Minneapolis. ‘Investors come from all over – even Canada, Europe and Japan,’ she says. ‘They can see all the company managements they want in one place.’
Key to ensuring the conference runs smoothly is keeping six different rooms filled with interested investors. So each room has companies from a different industry presenting – healthcare, technology and consumer goods, among others.
Then industry panels or company presentations in each room keep investors occupied during lunch. ‘Investors get to see all different industries in one setting, without going to different conferences,’ says Kamrowski.
Kamrowski believes that attending Piper’s annual conference is a good way for a small, new company to get some exposure: ‘Even if an investor doesn’t see the presentation, they’ll take note that the company was there.’
Behind the Scenes
Lucky CEO who parachutes into an investor conference for his dog n’ pony show then trots off to his next meeting. But that’s just the tip of the iceberg of behind-the-scenes planning. Over in the corporate marketing department of Bear Stearns & Co, Melissa Meyers, a senior member of the conference planning group, has been preparing for the moment for at least six months. She and her colleagues mastermind around 80 special events each year, including highlight conferences like media & communications, technology, high yield and healthcare.
‘Every conference is its own animal,’ Meyers remarks. ‘Some have up to seven simultaneous presentations going at a time, some have just one; some have individual company presentations, panels, or a mix of both. Most have break-out sessions. Each conference is structured in a way that will benefit our clients, catering to their needs.’
The media and communications conference, for example, has ten large company presentations and twelve from smaller companies. But investors profit from eight interactive panels of senior executives from major companies. And last year, five keynote speakers included such luminaries as Edgar Bronfman Jr and John Malone. There is also a buy-side panel of leading portfolio managers making their predictions for the next year.
Bear Stearns’ massive technology conference features over 100 presentations running four at a time along with nine lunchtime panel sessions and eight keynote speakers. Especially popular is the ‘Hot Products’ dinner where everyone rolls out their latest high-tech toys.
The annual high-yield conference – growing from around 900 investors to 1300 since last year – features three days of simultaneous company presentations in seven different rooms as well as some fantastic evening entertainment.
A healthcare conference, which last year attracted 1,400 investors, has four simultaneous presentations, each followed by a 30 minute break-out session.
What inspiration can Meyers offer to companies desperately striving to get noticed? ‘Know who your audience are,’ she suggests. ‘Try generating attention with the launch of a new product or other news just prior to the presentation; put together a fantastic presentation with small give-aways for attendees; finally, anticipate questions, and answer them in a clear and concise manner.’
Should a company attend if it’s in the middle of a crisis? ‘Definitely,’ asserts Meyers. ‘Investors want to see the company management during such times and would be wary if they were in hiding.’
Five Ways to Better Your Bet
Take full advantage: Most companies will drop in then drop out af-ter their presentation. Why not leave a team member to stake out the conference for the duration, building relationships with investors, analysts and peers?
Poach on other presentations: A CEO slides in a nugget of information from a competitor’s presentation and investors all sit up and take notice – This guy is paying attention! Gather new material from other presentations – or current events – and include it in yours.
Hand out hard copies of slides: Anyone writing down the details of every slide cannot also listen well. Give investors copies to take notes on and take home – many would have called up later to get copies anyway.
Work on speaking style: ‘The feel and the tone of voice of the presenter is important,’ says one fund manager of the way he makes investment decisions. Coaching top executives in public speaking pays off in spades.
Show smarts in real-time: Top executives didn’t get to where they are today without being bright, but investors usually need lots of convincing. Have your CEO plan some strategy live, right before their eyes. Even if it’s not implemented, investors will be impressed.
DAY IN THE LIFE
Bear Stearns & Co 1997 High Yield Conference, Day 2
- 7:25 am A stream of yellow cabs lines up on Park Avenue to disgorge passengers at the Waldorf Astoria’s main entrance. Inside, name tags are dispensed – blue for company managements, orange for Bear Stearns bankers and analysts, and green for buy-side managers and analysts.
- 8:45am Barry Babcock, chairman of Charter Communications Southeast, launches into his presentation by introducing a major equity investor in the audience, and by noting the absence of Charter president Jerald Kent – ‘He’s in the middle of a hot deal and couldn’t make it.’ Babcock says he’ll work fast – ‘not to avoid the issues, but to handle them in the Q&A.’
- 10:00am Brad Sparks, CFO of Omnipoint, the largest publicly-traded PCS company, is presenting to a standing room only crowd. Investor relations manager Laura Knight has flown up from Washington DC especially for the presentation, and finds herself at the back of the room in a whispered conference with a Bear Stearns managing director of investment banking. After the presentation Knight becomes a magnet for managers reluctant to brave the crowds around Sparks.
- 11:00am George Blumenthal, chairman of UK cable operator International CableTel, elicits discontented squints with hard-to-read slides of TV guides, but goes on to impress investors by brainstorming new marketing ideas – ‘We’ve got hundreds of our vehicles driving around England; why not put our phone number and what we do on the side of each van?’
- 12:15pm A panel of lawyers discuss distressed and bankrupt companies, (Legal & Structural Issues in Chapter 11 – Post Petition Interest for Unsecured Creditors and the ‘X’ Clause’) draw a huge crowd but baffle the audience. When it’s time for Q&A, the lawyers quiz each other.
- 1:30pm Over 500 investors fight for 400 seats in the Waldorf ballroom. Extra tables are hastily set up. Alan Schwartz, the Bear’s banking chief, introduces Dr Wayne Angell as the keynote speaker. The investment bank’s chief economist – and former member of the Federal Reserve Board – proceeds with a pep talk on economic growth, coming out bullish on both fixed income and equity.
- 2:20pm Two Bear Stearns analysts stake out the fourth floor corridor, trying to arrange a private meeting with the chief executive of a cable company. An administrator laments that the CEO is too busy.
- 3:30pm ‘So is the smart money going to the dinner tonight?’ wonders a fund manager. The consensus seems to be ‘yes’.
- 4:30pm One of Bear Stearns’ top M&A bankers flutters around the registration table in preparation for a one-on-one meeting with a company CEO. He checks if the client – maybe ripe for a transaction – has arrived yet.
- 10:30pm Tatou Restaurant is packed with conference attendees bonding with Bear Stearns bankers and analysts. They have already demolished a mountain of shrimp and a buffet dinner when the head of high-yield takes to the dance floor.
Wireless Wonder
With 25 investor conferences under his belt, Robert McFarlane has the game down pat. The CFO of Canadian wireless operator Clearnet says he’s never turned one down. Recently, he touched down in New York for the Bear Stearns & Co high-yield conference.
‘Particularly with an early stage company like ours, without conventional earnings or statistics, it’s in our best interest to keep shareholders informed by attending investor conferences,’ McFarlane remarks.
He may describe Clear-net as ‘early stage’, but after raising $1.1 bn in equity and high-yield debt in the last three years, and listing on the Nasdaq Stock Market and the Toronto Stock Exchange, McFarlane is a veteran of investor meetings.
He notes the contrast between a roadshow and an investor conference: ‘With a roadshow, you’re under immense time constraints, with seven or eight presentations a day. But we’re not a five minute story – the more time we have the better we look. An investor conference is much more structured and controlled.’
McFarlane notes that the host firm will usually take advantage of Clearnet’s attendance at an investor conference to set up meetings with analysts or corporate finance people. ‘They want to catch up with developments and further their banking relationships,’ he says.
So Clearnet’s last equity issuance may have been underwritten by RBC Dominion Securities in Canada and Morgan Stanley in the US, with its latest fixed-income offering led by Morgan Stanley, but a conference host like Bear Stearns is still very eager to talk deals with McFarlane during his New York visit.
‘One of the criteria upon which we evaluate investment dealers is whether they expose us to a wide audience by inviting us to speak at conferences,’ McFarlane explains. ‘Often you can see the power of a firm’s distribution in its conference. Certain firms attract a wide and deep audience while other conferences are thinly attended – it’s all a big reflection of the investment dealer’s research following.’
McFarlane says Clearnet’s presentations are popular because they’re both informative and entertaining. For this latest trip to New York, he played a tape of three amusing radio commercials for a new ‘Mike’ brand of wireless service. Until recently, he was showing TV commercials featuring Mike. ‘We have people coming to our presentations because they are curious about our ads,’ he says.
Whether it’s an investor conference, annual meeting or conference call, McFarlane says Clearnet has a simple rule of thumb: make it worthwhile for investors to attend. ‘Tell them something interesting and go beyond normal disclosure to keep them informed so they can make their decisions.’
So compared to most annual reports of around 40 pages, Clearnet’s latest is 77 pages. And instead of 15 slides like other companies, McFarlane’s investor conference presentation has 40. And although he was in New York for a Scotia Capital Markets conference just two weeks before his Bear Stearns gig, McFarlane made sure he added some fresh information to keep investors interested.
