New York, New York. Loud, fast-paced, energetic – it’s a city that makes an impact. As the financial and news media capital of the US, and home to the world’s two largest stock exchanges, Wall Street, and innumerable corporations, brokerage houses and investment banks, it also has enormous importance as a roadshow destination.
And there’s certainly an eager roadshow audience to be found. The city’s ten largest investment firms alone have combined equities under management of over $1.25 tn and have predominantly low or moderate turnover, according to CapitalBridge.
While the size, amount and variety of investors means there are great opportunities to be had, it also means a large number of companies are all competing for New York-based investors’ attention. In this environment, roadshows have to be well planned and perfectly executed.
Background research
‘It’s important to find the right match, to be sure that you’re talking to the right people,’ says Montieth Illingworth, managing director of the New York office of communications firm Gavin Anderson. ‘There’s no point going to a fund that has maxed out in your sector, so pick your targets well.’
One thing that makes New York different from other US cities is the high concentration – and ever-increasing number – of hedge funds. They can’t be ignored, but they don’t have to be pandered to: ‘Don’t alter your message to tailor to a subsection of the audience,’ advises Mark Bonacci, New York-based director in the corporate financial practice of PR firm Burson-Marsteller. ‘Stick to a good, long-term message.’
Of course, it’s important to pick the right time for your roadshow, and not just so you have a clear slot among your peers. A non-deal roadshow should fit with what investors are currently looking for, and right now it seems that conservative but solid growth companies are in vogue.
‘In the past year the equities market has not been that great. There’s an inverted yield and bonds aren’t performing too well,’ comments Illingworth. ‘What this means is that there’s a great appetite here for companies that can get investors to alpha. The buy side wants solutions; it’s not easy to get to alpha in this market. That creates an opportunity
for an IRO to come in with a strong story and an investment thesis that will get that buy side to alpha.’
‘Despite any challenges, New York remains a very active, very fertile place for investing,’ says Bonacci. ‘Companies across many different industries can raise a lot of interest here.’ He adds, however, that the New York scene is easier for mid-cap and large-cap companies than it is for small-cap or micro-cap enterprises. ‘A lot of the institutions are pretty sizeable and like to take decent positions while working discreetly. With small or micro-cap companies, it’s harder to go in and out without affecting stock price; furthermore, there’s not as much equity research on the smaller companies, so it makes investing more of a risk.’
Despite the devil-may-care attitude for which New Yorkers are renowned, it seems stability is key when it comes to investing. ‘The buy side would rather get 4-5 percent growth in the long term on a quality stock than ride the waves of a risky investment,’ says Illingworth.
Laying out the facts
The sheer number of institutions here means New York should be on the roadshow calendar at least once a year for senior management, with IROs visiting two or three times on top of that. Roadshows can easily last up to three days and should cover everything from large group meetings to one-on-ones. ‘One of the great things about investor marketing in New York City is the investment community’s flexibility around meeting formats,’ says Valerie Gerard, executive VP of IR at New Jersey-based CIT Group.
It’s critical to leave time, either before or after the presentation, for investors to mingle informally with management. ‘For some investors, meeting the top executives is a requirement before making an investment decision,’ Gerard says.
For companies new to the investment scene, it’s important not to skip background information. ‘You’ve got to remember that investors in New York often cover 100 companies or more and, as a result, may not be fully up to speed on your company,’ Gerard points out.
For more established companies, however, it’s a safe bet that your audience will be very much up to date on your company as well as your industry and peers. Make sure your management is fully briefed on any industry developments and can differentiate you from peer companies.
After the presentation, be prepared for a thorough Q&A session with some very probing questions. ‘We’ve noticed a higher level of sophistication among attendees in New York City over the past few years,’ explains Tony Russo, CEO of New York-based strategic communications firm Noonan Russo. ‘In healthcare, for example, investors often have advanced degrees. Even very young analysts know the science as well as the industry very well.’
In addition, corporate social responsibility is a rising topic of interest for New York investors. New York’s five largest investment firms all have around a quarter to a third of their assets invested in companies included in the Dow Jones Sustainability Index, according to CapitalBridge. If CSR is important to your firm, make sure New York investors are aware of it.
Sticking to the plan
One stereotype of New Yorkers that does hold true is the frantic pace at which they operate – time is precious in the Big Apple. When it comes to roadshow planning, make it as easy as possible for investors to attend meetings and get the information they need.
‘You won’t find much resistance to early morning meetings,’ says Sharon Weinstein, director of IR at Noonan Russo. ‘Most New Yorkers would rather get meetings out of the way and get back to their desks.’ As Manhattan also has a large commuter population, late afternoon meetings aren’t too popular.
Weinstein recommends giving hard copies of presentations and other materials to investors. ‘There is a very positive reception in New York to the distribution of printouts of slideshows, with space alongside to write notes,’ she says. For longer and more technical presentations, Weinstein suggests putting the presentation on a memory stick for each attendee to take away with them.
When it comes to choosing meeting venues, it’s best to pick places that are as easy as possible for investors and analysts to get to. More and more, that means these individuals’ own offices. ‘It is becoming increasingly difficult to get New Yorkers away from their desks, so plan on many in-house meetings in offices and conference rooms,’ says Gene Marbach, group VP of New York IR and PR firm Makovsky & Company.
New York has a huge number of hotels that are used to hosting investor roadshows both large and small. For breakfast, lunch or dinner gatherings, Gerard offers a handy tip: ‘Use the sell side to arrange meal-related meetings, as their roadshow groups know which restaurants have private meeting rooms. They are also well equipped to manage multiple invitations.’
In terms of getting around, New York can be surprisingly easy. ‘Logistically, I think New York is one of the easiest places to do a roadshow – everything is very compact, and you can often walk from one place to the next,’ says William Walkowiak, director of IR and corporate communications at New York-based EDO Corporation.
Most financial institutions and hotels are in the midtown area, but there are still a number of firms downtown in the Wall Street area. Despite the relatively short distance between these two locales, and the high concentration of institutions midtown, traffic in Manhattan can sometimes hinder even the best-laid roadshow plans.
Most companies hire a limo for the day – or sometimes resort to taxis – but if you’re on your own, or your colleagues are an adventurous bunch, don’t rule out the subway. It can sometimes be the only sure way of moving quickly between midtown and downtown.
Pre-planning a sensible route of one-on-ones is important here. Post-9/11, most buildings require sign-in and photo ID, and at busy times this can add an extra five or ten minutes.
For companies looking for help setting up a roadshow, New York has a great concentration of both consultancies and sell-side sales teams. ‘There’s no place better than New York for the range of investor relations agencies,’ explains Walkowiak. ‘You can find agencies specializing in any industry, market cap and particular need.’
This pretty much sums up New York. It’s a city where you can find anything you’re looking for – from the world’s largest institutions to the tiny boutiques, from presentations given to thousands at investor conferences to days of one-on-ones, from limo journeys to subway rides.
