Four former sell siders on what they learned from switching to the corporate side
It’s news to no one that investor relations is increasingly appealing to former sell siders. Events from the financial crisis to the introduction of Mifid II in Europe have combined with trends around the increase of passive investing and a squeeze on the sell side to drive some to look elsewhere – with many landing on IR.
We spoke to former analysts, researchers and a corporate access specialist who had all ‘gone corporate’ to find out what it was really like making the move from banking to investor relations and here are five things we learned. You can read the in-depth article with a My IR account here.
No one really appreciated the work that went into IR – until they became an IRO themselves
As former sell siders, Bonita To, director of investor relations at First Quantum Minerals, Blake Fernandez, vice president of IR at Plains All American, Romas Viesulas, head of IR at 200-year-old Portuguese ceramics firm Vista Alegre and Claire Mogford, head of investor relations at SEGRO, brought many decades of combined experience to their roles when they moved into investor relations. But, while they had countless interactions with IROs at the companies they covered and worked with, all agreed there was a lot about IR they hadn’t fully appreciated – in particular the internal workings of the role.
‘I under-appreciated the work that went into preparing for the quarter, the management discussion and analysis or the conference call. The preparation that goes into anticipating all the potential questions that might be asked,’ explains To.
Leaning on the wider company team makes all the difference
Wherever the learning curve is coming to IR from the sell side, your own new company is your biggest resource, explains Fernandez. For example, he had 15 years covering integrated oil and refiners before he joined Plains, but what he didn’t have was a reporting background. Leaning on other departments to get up to speed as fast as possible, he says: ‘If you have a strong chief accounting officer and a strong SEC group, those are the people that can really guide you.’
Especially when you’ve lost some of the tricks of the trade
The positives of what sell siders bring to IR are clear – extensive experience in modeling, deep relationships with the Street and often an established relationship with management as well. But are there negatives? Viesulas talks about some of the things he had to learn to do without after a banking career spanning more than two decades and half the globe.
‘We have our corporate brokers and I do some of it myself,’ he says. ‘But we don’t have a dedicated corporate access team: Previously, some of that would be spoon-fed to me.
‘The other thing is that I no longer have my Bloomberg screen, or my colleague that might be sitting a couple seats down. Stuff that was really at the tip of my fingers is sometimes just not that easy to find. [In IR] I have to be a little creative – and also understand the limits of what is readily available. I hadn’t realized just how intoxicating it was to have all of that information on hand!’
Their time on the sell side influenced their approach to IR
Another point that To makes is around the need for flexibility coupled with control, citing her own experiences in research and sales as having influenced how she feels an IRO should approach certain communications.
‘I see research notes that are concerned about the guidance, but then the company would still spend 30 minutes talking about the past quarter – when investors are really forward looking,’ she says.
‘My advice is to read the room and, if you’re seeing research notes that are saying that your announcement is negative, address that upfront and address any concerns because you really need to be able to control the narrative – and it’s not enough to leave it to the Q&A because it might not come up or might not be addressed in the way you want.’
IR is different everywhere you go – so it’s vital you match well
This is a point echoed across our four former sell siders: make sure you choose correctly when you make the move from banking to IR.
‘I was quite staggered when I realized the breadth of what you do as an IRO,’ says Mogford. ‘And IR is so different at each company too, which doesn’t often get talked about. Reporting structures can be different, what’s within your remit can be different. I have responsibility for the annual report, at other companies IR might not. At SEGRO every employee is a shareholder, which drives a real motivation to understand the share price – that was an internal audience I hadn’t really considered.’
Mogford adds that, in her view, it is the SEGRO structure that has allowed her to have the IR experience she enjoys so much. ‘The most interesting IR roles are where you have a very broad range of experience and interactions,’ she explains. ‘At SEGRO, I get to really add value.’
To sums up the point nicely: ‘Make sure that you go to a company that you believe in,’ she says. ‘You want to believe in the strategy, the culture and in the management team – and work well with that management team.’
