Pittsburgh. The town where America’s industrial heart once beat strongest, smokiest, dirtiest and most powerfully. For more than a century, Pittsburgh was the gritty, grimy showplace of American manufacturing muscle. Then it became a symbol of something quite else, as the mills shut down and the smoke cleared to reveal an economy that seemed withered and dead.
Today, Pittsburgh has entered a new era. It is a relaxed place where business is done effectively, efficiently and cleanly. And where enough money from the steel days still resides to make it earn a place on a roadshow agenda – but not too big a one. There are pockets of value to be found anywhere, and Pittsburgh is one of them.
‘There is a fairly active venture capital representation in Pittsburgh,’ says Bob Ryan, president of DXI Inc, a local company that specializes in automating collection, use and transmission of transportation industry information. There are also some large banks and one major local brokerage. In addition, the big six accounting firms are all represented, and corporations such as Heinz, Alcoa and, until recently, Westinghouse all have their headquarters in the town.
Even locals say that, for most roadshows, Pittsburgh is worth a visit but not a full day. The good news is that the city’s relatively small size and accessibility make it possible to cram a lot of activity into a comparatively small amount of time.
‘You can come in and do Pittsburgh very easily, and use the airport to get out to another city in the same day,’ according to William Whetzel, a partner at Parker Hunter Inc, which is acknowledged as the leading locally-headquartered full-service brokerage. ‘I think you could do Pittsburgh and Philadelphia in a day, or Pittsburgh and the Baltimore area. You could even do Pittsburgh and Chicago in a day,’ Whetzel says.
Conducting a roadshow in a city in less than a day takes planning and information. That means it’s important to know the city, the players and the services.
Access providers
In any town or city, there are always a few people who know where the money is – and the best way to get it. The downside to this is that if you don’t go through the right people, it’s sometimes hard to get anywhere at all. ‘Pittsburgh’s financial community is pretty close-knit; if you’re not playing on the inside there’s not a lot you can do,’ Ryan says. The good news is that breaking in isn’t that difficult. ‘It’s not hard to break in. It’s not clubby. It’s just that you can’t get anywhere without these guys,’ he says.
When it comes to reaching out to the top players in financing, ‘these guys’ consists of one company, insiders say: Parker Hunter Inc. ‘That’s who we’ve worked with; they took us public,’ says Tim O’Brien, director of corporate communications at telecommunications manufacturer Tollgate Communications. ‘They’re a Pittsburgh-based firm and they’re a good firm to work with,’ he says. Executives at Parker Hunter say they’re perfectly willing to help out with investment roadshows.
For those who want to go direct, Pittsburgh’s size makes the going easy. There simply aren’t that many institutional investors to contact. When it comes to big money, Pittsburgh has only a few major players. The top ones are Mellon Bank, Federated Investors and PNC Bank. Each has its own appeal and limitations for roadshow schedulers. PNC doesn’t really count, insiders say, and Mellon is also not as big an operator in equities as it might seem. ‘Most of PNC’s operations are not in Pittsburgh,’ according to one executive. And Mellon’s money management operations in Pittsburgh are probably 20 percent or less of its total. Moreover, what is there is primarily quantitative,’ adds the executive. On the other hand, ‘Federated’s operations are all here.’
Federated may be the number one Pittsburgh destination for many visiting companies. According to Thomson Investor Relations, the institution specializes in undervalued securities and uses a top-down and bottom-up approach. The security selection consists of three components: relative value, fundamentals and market feedback. The relative value analysis screens and ranks a universe of stocks which offer the best value and potential returns. The valuation model screens for relative earnings growth, relative PE, dividend discount model and cash flow analysis to yield a single statistic reflecting a stock’s relative value. Federated then applies fundamental analysis to identify critical variables and confirm whether or not a stock is in fact genuinely undervalued. Finally, in-house analysts monitor price action to identify positive price movement, which indicates when the value of a security is beginning to be recognized by the market.
Small cap resources
For those looking for venture capital or with small cap projects, the Pittsburgh High Technology Council is probably the best place to go. The organization’s members include more than three dozen venture capital firms with assets ranging from $3 mn to more than $200 mn. And, once again, this group is ready and willing to work with roadshows. ‘I would certainly help find the right people to talk to,’ says Kevin Lane, the council’s director of public relations.
Getting a grip on Pittsburgh’s small cap resources is somewhat more difficult than targeting its large cap providers. Among the top players William Whetzel lists are CS McKee, Rockhaven, Quaker Capitol and Emerald Advisors. Even for some of these companies, Pittsburgh is a branch office. ‘Emerald is based in Lancaster, Pennsylvania but has a presence here in Pittsburgh,’ says Whetzel. Branches can prove useful, though. ‘Even through CS McKee is a part of United Asset Management, it’s run like a boutique out of Pittsburgh and can be accessible,’ says one local executive.
Cityscape
Steel made Pittsburgh’s fortunes, but water was the reason the town was founded. Two great rivers meet at the city’s very tip, as Allegheny and Monongahela come together to form the Ohio. This creates a setting that is both attractive and useful. Blue water and green hills provide a pleasant frame for a glass, granite and steel downtown.
Once this view would have been obscured by smog and lit primarily by the glare of blast furnaces. But there are no longer any mills within Pittsburgh’s city limits. Now that the smoke has cleared, it’s easy to see that Pittsburgh is an attractive city, its downtown a miniature version of Manhattan, including the skyline.
Unfortunately, the view isn’t clear all that often – visitors to the town should plan for the possibility of wet weather in a city that has more rainy days than Seattle. The town also boasts something few other towns of its fairly significant size have: surprise.
Pittsburgh International Airport is around 15 miles from the city. About half that distance is covered on local roads, the rest on a broad, four-lane highway, Interstate 279. As it closes on the town, 279 goes through the Fort Pittsburgh Tunnel. It’s impossible to see the city before entering the tunnel; and impossible to miss it afterwards. ‘As you come through the Fort Pitt tunnel, it’s like you’ve come into Oz. I’ve heard people gasp,’ Ryan says. Suddenly, the view shifts from green hills and a suburban landscape to sky-punching office towers.
‘People talk about that view being their first impression of the city, and it’s a good one,’ O’Brien says. Arriving from the airport, which is dominated by US Air, takes about 25 minutes, though rush-hour travelers should budget an hour to an hour-and-a-half.
Once in Pittsburgh proper, shoe leather is the best means of transportation. ‘The city is very manageable in terms of getting around,’ confirms Whetzel. ‘There are several hotels right around downtown, and you can get from Federated to Mellon to CS McKee in a ten minute walk between any two meetings,’ he says. ‘It makes for an easily planned and compact visit,’ he says.
Best & the rest
Roadshows planners wanting to avoid the time and trouble of traipsing around to myriad different offices will find a number of good venues in Pittsburgh. For anyone searching out a distinguished place to hold a meeting, the vote is unanimous: the Duquesne Club. Be warned that it’s pronounced ‘Dukane’ – and everyone in the city knows the right way to say it. ‘It is a private club; it is the club where the big Pittsburgh executives have done business for over a century,’ O’Brien says. ‘They know exactly what you need, and they can deliver what you need first class.’
The Duquesne does have some limitations. ‘It’s an older building so they don’t have the flexibility that modern hotels might have in terms of partitioning rooms and room sizes,’ O’Brien says. ‘You just don’t have state of the art technology in the building,’ he says. Because the club is private, investor relations officers from out of town will need an ‘introduction’ to get in. But virtually every major listed company in the local area is a member and can use the facilities.
Seeking sophistication
For those with needs the facility can’t meet, or who don’t want to go through the trouble of securing space, Pittsburgh has a number of sophisticated, modern hotels, including a Sheraton and a Radisson. Overnight visitors looking for addresses with cachet might prefer two local favorites, Westin William Penn and the Doubletree. Some locals are unsure about which is better, but not Ryan. ‘In town, there’s a single hotel that’s noted, and it’s the William Penn, which is reminiscent of the Waldorf Astoria.’
The Doubletree, however, offers benefits in the form of after-dinner activities. It’s located near an area called ‘the strip’, with lots of night-life near the produce yards. And after the day is done, Ryan suggests his favorite watering hole: ‘When you’re all done with your roadshow, go to Froggy’s on Market Street. It’s the Cheers of Pittsburgh. Froggy’s will make you comfortable.’
Pittsburgh has a tough reputation with its grimy, steel mill heritage, that locals say is quite undeserved in today’s environment. ‘It’s a comfortable town,’ Ryan says. ‘One of the real nice parts of being in Pittsburgh is the human beings that occupy this place on a business basis. They’re friendly, open, engaging,’ Ryan says.
And as anyone who’s done it knows, investor relations officers staging roadshows need all the friends they can get.
