Some 30 years ago, when Montreal played host to Expo ’67, the island could easily be described as one of the most cosmopolitan cities in the world. Nestled at the southern end of la belle province, this French Canadian city was the center of finance, art and cultural revolution from the late 1960s through the early 1970s. Montreal was also the stomping ground for heavy tensions between the French Canadian separatist movement and English Canada, a battle that eventually put a strain on the city’s economy. Nowadays, the original luster which placed this city on the world map has been replaced by a new kind of grandeur.
Montreal’s new glory is centered around some key industries and a strong buy-side community made up of what locals describe as ‘serious investors’. According to Canada NewsWire, 15 percent of Canada’s publicly traded companies reside in Montreal. ‘Montreal has developed some strong market niches in the high-tech, biotech and aerospace sectors,’ says Jean-Francois Piche, general manager at CNW’s Quebec bureau. For example, Air Canada and Bombardier are both headquartered in the Montreal area. The telecommunications industry also has a significant presence with major players like BCE and Cogeco calling Montreal home. ‘The economy has really picked up in the last few years,’ adds Piche.
The second city
Montreal is the second largest financial market in Canada with major buy-side players like the Caisse de Depot et Placement du Quebec, TAL Global Asset Management and Natcan Investment Management based here. Most local portfolio managers are research intensive and use a fundamental approach to choosing their investments. Stephane Gagnon, president of the Montreal Society of Financial Analysts and a portfolio manager at the Caisse de Depot, the province’s pension fund, thinks this fundamental style is the Caisse’s influence: ‘Many of the senior management teams and portfolio managers now working in other Montreal institutions like Natcan and TAL started their career at the Caisse and our approach here is definitely fundamental.’
With C$125 bn under management, the Caisse is certainly worth a visit. ‘We have a group of industry specialists here, so we look at each company individually,’ notes Gagnon. The research staff is divided into two departments: 15 analysts working on the equity management side, each specialized in a specific sector, and seven generalists working just on Canadian equities. There’s also a group of portfolio managers in charge of certain large strategic holdings that the pension fund has in Quebec-based companies like Quebecor and Domtar. And while 90 percent of the Caisse’s investments are in North American companies, European IROs should not be discouraged from coming to visit Canada’s second largest institution.
Serious investors
‘The difference between the Montreal and Toronto investment communities is the same as the difference between Boston and New York,’ suggests Sebastian Van Berkom, founder and president of Van Berkom & Associates. ‘We Montrealers tend to be more laid back but we also tend to be more serious.’ Away from the pressure cookers of Bay Street and Wall Street, Montreal portfolio managers are better able to base their decisions on long-term goals rather then near-term performance, he suggests.
With C$1.5 bn in assets under management and seven portfolio managers, Van Berkom describes his shop as the ‘one of the top players’ in Canadian small-cap investment. ‘We’re Garpers, to use the modern phrase, meaning we buy early established growth companies at a reasonable price relative to their long-term sustainable growth,’ says Van Berkom. In Montreal the firm has four portfolio managers dedicated to Canadian small-caps. With a focus on growth-oriented areas of the economy, these portfolio managers make their stock choices based on a company’s business plan and one-on-one meetings with senior management. ‘We do a thorough due diligence process, and develop a full-fledged financial model for every company so that we can analyze the principle drivers, the context of their internal resources and the competitive environment in which they work,’ says Van Berkom. ‘We are a strong fundamentalist.’
Most Canadian small-cap companies are well advised to pay a visit to this Montreal-based firm. ‘We take major positions in Canadian small-cap companies and own more than 10 percent of the outstanding shares of many small-caps on behalf of our clients,’ adds Van Berkom. ‘We are serious long-term players and we have at least one company come into our office every day.’
Other Montreal fund managers interested in small and mid-cap companies include Formula Growth, which is focused on US equities, and Pembroke Management. CNW also offers a service called Growing Companies Disclosure Package to help small and mid-cap companies target investors.
Global investors
‘With Montreal being just a short hour’s flight from Toronto or New York, it’s definitely worth a visit to the Caisse and TAL Global Asset Management,’ comments CNW’s Jean-Francois Piche.
‘My style is fundamental as well,’ says Maurice Hebert, vice president of TAL International, a division of TAL Global Asset Management. ‘Today my portfolio is a little bit overweight in Finland, Sweden and Germany, and a little underweight in Austria, Belgium, the Netherlands and Norway, so you can see I prefer a country where the earnings growth is better than the average earnings growth in Europe,’ says Hebert, who is eager to meet with IROs from large European companies. ‘It would help my job to meet with IROs for companies where the weighting is significant [in the country index] like Ericsson, Nokia, EMI, Telefonica and Vodafone because I must assume some earnings growth for those companies,’ he says. Most of TAL’s Montreal-based portfolio managers are focused on Canadian equities, explains Hebert. However, because ‘their job is to choose good stocks; they are quite open to meeting with new companies.’
The personal touch
The best approach with the Montreal investment community is to schedule a series of one-on-one meetings with portfolio managers. ‘We generally like to meet with the CEO and IR person and we have them come see us,’ says Stephan Gagnon at the Caisse. Gagnon is not opposed to small group meetings with other portfolio managers but says it’s always preferable to have a one-on-one.
TAL’s Maurice Hebert agrees: ‘The best approach is to have a one-on-one meeting, and if not, to schedule a small group for a lunch meeting.’
Sebastian Van Berkom also suggests thoroughly researching Montreal firms and institutions before setting up a meeting. ‘Understand our investment philosophy so you don’t waste our time,’ he says. ‘Many IROs will call us from companies that we would not even consider investing in and if they had just done their homework, they wouldn’t call us.’
Van Berkom also prefers one-on-one meetings. So while many investor relations officers may have shied away from one-on-ones since Regulation Fair Disclosure was introduced, it would definitely be worth adopting this approach when passing through Montreal.
Open dialogue
In terms of presentation style, Montreal portfolio managers are used to a more informal dialogue than Toronto money managers. However, it’s important to be prepared with a small package and PowerPoint presentation just in case the portfolio managers you meet have not yet familiarized themselves with your company. ‘It’s best to come with the usual formal presentation, but if it’s a small meeting, many times you won’t use it,’ says Van Berkom. The Caisse’s Gagnon says he often prefers an informal style as well. ‘We like a short review of the operations, the company’s objective, its strategy, but we don’t necessarily follow the text because we may improvise and ask questions unless something has just happened, like an acquisition,’ he says.
Quebec’s official language is French but much of the business community operates in both French and English. So, while it’s not essential to prepare a bilingual presentation, ‘An IRO might want to offer to bring a translator just to be polite and make the buy side feel comfortable,’ suggests CNW’s Jean-Francois Piche. ‘Most people working in money management are bilingual and speak English on a day-to-day basis but the offer demonstrates a respect for Quebec culture,’ he adds. CNW employs 16 full-time translators to fulfill the translation needs of public companies in Canada and around the world.
Research tools
Before hopping a plane to Montreal, IROs should endeavor to pinpoint which local money managers they should target. One resource is Canada NewsWire’s Fund Holdings Reporter Online, which identifies mutual fund shareowners of Canadian companies. ‘An IRO has access to all the financial data like how many shares a mutual fund owns of a specific stock and the dollar value,’ explains Piche.
Montreal has two local groups of securities professionals which host regular luncheons. Le Cercle Finance et Placement du Quebec is a local group of portfolio managers, lawyers and IROs who get together twelve times a year to hear presentations from different CEOs. ‘We have 300 members,’ says Nathalie Bourque, partner at National Public Relations in the IR division and president of the Cercle. CEOs are chosen by the organization’s board of directors and Bourque is open to suggestions from IROs who think that their CEOs would be good candidates. ‘People come for a cocktail and luncheon. Then the CEO presents their company and retail brokers, portfolio managers and institutional analysts are allowed to ask questions,’ says Bourque. Normally, these luncheons attract in the range of 75-200 people depending on the speaker.
The Montreal Society of Financial Analysts also hosts company-sponsored lunches where IROs are invited to present their company’s story. ‘Basically we invite an IRO to come and speak. We organize everything, and the company picks up the tab,’ explains the Caisse’s Stephane Gagnon, who is also president of the MSFA. Recent speakers include IR professionals from Intel, Novartis and Nokia. ‘The companies like the formula and it’s a way for them to reach a larger potential audience of analysts,’ adds Gagnon. Once again, depending on the size of the company, the luncheons attract 50-100 members.
Media relations
‘The main media targets on the print side are La Presse, a daily newspaper, and a weekly called Les Affaires,’ says CNW’s Piche. Both of these publications are in French and therefore ‘It’s always better to pitch your story in French,’ adds Piche. For business news, Montreal’s English community reads the Gazette, another daily newspaper, and the two national dailies, the Globe and Mail and the National Post. ‘The Globe and the National Post both have news bureaus here in Montreal,’ notes Piche. Quebec also has two major financial web sites worth targeting. Les Affaires online and Webfin both feature editorial stories as well as news feeds from Canadian Press, Reuters and CNW. Meanwhile, the Canadian Radio-Television and Telecommunications Commission recently approved a new 24-hour business news channel called LCN Affaires, which is expected to launch next year.
Leaping ahead
‘The investor relations community in Montreal is getting bigger all the time,’ says Nathalie Bourque of National Public Relations. In the last two years, Ciri’s Quebec chapter has almost doubled in size from 45 members to nearly 80. ‘We do not have a regular meeting but we do try to organize our events two weeks in advance,’ says Denis Chouinard, chairman of Ciri’s Quebec chapter and treasurer at supermarket chain Metro. Chouinard says the Quebec chapter welcomes any visiting IROs to take part in these events. ‘IROs in Montreal are very friendly and so there is a good relationship both within the IR community and between IR professionals and brokers,’ he says.
Montreal-based IROs were among the first Canadians to webcast their quarterly conference calls and annual meetings. Last year, of the 350 webcasts CNW hosted, 40 percent were done out of Montreal. This may be the influence of large telecommunications players like BCE who have spearheaded the webcasting trend. Companies are now starting to double-stream their webcasts in French and English simultaneously. That way the audience can choose which language they would like to hear the presentation in. ‘From a retail perspective, double-streaming is very important because you are able to serve your investor in their language of choice,’ says CNW’s Piche.
That choice typifies Montreal, whose citizenry seems to straddle Quebec, Canada and the world. Whether you’re from elsewhere in Canada, the US or Europe, you might just find what you’re looking for there.
Travel information
Where to present
International Civil Aviation Organization
99 University Street
Tel: +1 514 954 8219
École des Hautes Études Commerciales (HEC)
3000, chemin de la Côte-Sainte-Catherine
Tel: +1 514 340 6000
Montreal Exchange
800 Square Victoria
Tel: +1 514 871 2424
Where to stay
Queen Elizabeth
900 René-Lévesque Boulevard West
Tel: +1 514 861 3511
Le Centre Sheraton Hotel and Towers Montréal
1201 René-Lévesque Boulevard West
Tel: +1 514 878 2000
Ritz Carlton
1228 Sherbrooke Street West
Tel: +1 514 842 4212
Where to eat
La Queue de Cheval
Bar-Steakhouse
1221 René-Lévesque Boulevard West
Tel: +1 514 390 0090
Toqué!
3842 Rue St-Denis
Tel: +1 514 499 2084
L’ Express
3927 Rue St-Denis,
Tel: +1 514 845 5333
Where to go
Montreal Museum of Fine Arts
1379 and 1380 Sherbrooke Street West
Tel: 1 514 285 1600
Montreal International Jazz Festival
Jazz performances throughout the year
For information visit: www.montrealjazzfest.com
Just for Laughs Museum
2111 St-Lawrence Boulevard
Tel: 1 514 845 4000
Largest institutions
Caisse de Depot et Placement
TAL Global Asset Management
Jarislowsky, Fraser
State Street Global Advisors Canada
Montreal at a glance
18% of Canada’s high tech sector is based in Montreal. Specifically, 16% of Canada’s computer, software and electronics companies.
22% of Canada’s telecommunications companies are based in Montreal.
34% of Canada’s biotechnology companies are based in Montreal.
Source: Earnings Division, Canada NewsWire.
Changing landscape
Two years ago, Canada’s stock exchanges went through a major restructuring when the Alberta and Vancouver stock exchanges merged to form the Canadian Venture Exchange (CDNX). Canadian equities trading essentially moved to the Toronto Stock Exchange (TSE); and the Montreal Exchange (ME), once the center of Canada’s capital markets, was paired down to trading a limited number of Quebec-based stocks, derivatives and futures. The Quebec government then signed an agreement with Nasdaq International to begin trading Nasdaq-listed stocks through Montreal-based brokerage firms. In November 2000, Nasdaq Canada officially commenced operations and has now formed alliances with Nasdaq Japan and Nasdaq Europe.
