‘Over the last year or two, we’ve actually had more success in Los Angeles than in a long time with small-cap, value-focused, family office funds,’ says Adam Borgatti, Aecon’s senior vice president of corporate development and IR, who joined the board of CIRI in 2022. He is also part of the IR Magazine Awards Hall of Fame – Canada.
‘So LA has come higher up my radar than it had been in the past. Chicago is another place we’ve been having increasing success with.’
IR Magazine research shows that, although small-cap companies do visit these cities, they do so far less than their larger-cap peers.
A sharp drop-off
Digging into market cap differences in the data behind the 14th annual IR Magazine Global Roadshow Report, we find that while New York and London are the most-visited cities for small-cap companies – as they are across all cap sizes – Boston, which comes in third place for mid, large and mega-caps alike is far less popular among smaller companies.
While 40 percent of small-cap firms visited London in the 12 months covered by the study and 36 percent went to New York, just 11 percent visited Boston. This compares with 33 percent of mid-caps, 53 percent of large caps and 57 percent of mega-cap firms. In fact, both Paris and Toronto proved more popular among small-cap companies (13 percent).
The data shows that, once small-cap companies have ticked off London and New York, few other cities remain on the radar.
Looking at Chicago and LA, where Borgatti says he’s been having increasing success, we see that while 11 percent of small-cap firms are visiting Chicago, just 5 percent head to LA. This compares with 20 percent and 8 percent, respectively, when you jump just one cap size, with numbers increasing steadily as company market cap grows.
Fund start-ups
To what does Borgatti attribute this shift in investor success? ‘You’ve got people starting up independent funds,’’ he says. ‘There are global centers with huge investing businesses and some of these will just take a fund and run with it – so New York would have been a proven path for a long, long time. Now, some other markets are opening up through people who’ve been successful and are now starting hedge funds and value-focused [vehicles] elsewhere.
‘Once we have a level of interest from two funds that have reached out to us, we’ll look at that market specifically and see if we can unearth anything else to do our own mini-roadshow’
Borgatti
‘Most of the people we see have a very small presence: they have a bunch of family office money and are very active and nimble.’
For Borgatti, these locations grow quite organically. ‘Once we have a level of interest from two funds that have reached out to us, we’ll look at that market specifically and see if we can unearth anything else to do our own mini-roadshow,’ he explains.
He describes the approach of a lot of the funds he meets with in Chicago or LA as quite open and informal with a good amount of in-bound interest vs targeting on his part. ‘For some of these deep-value funds, contact is all direct’ with no broker involvement, he adds, explaining that recent years have seen an increase in outreach from funds looking to meet.
‘[These funds] do their homework, they’re reaching out to IR,’ he continues. ‘So making sure they understand who to connect with and that they have access to IR is important. These investors are finding me directly from our materials and from our website.’
Appreciative of your time
Once that initial contact has been made, what are the next steps? ‘We usually start with a virtual meeting or two,’ explains Borgatti. ‘Then, when we show a willingness to build a day around a meeting or two, when we reach back out and say, We may be in your area around this time, would that work for you for meeting?, it’s an immediate ‘yes’.
‘These funds are very appreciative when you structure time to meet with them in person. And after you’ve cleared those initial questions around the fundamentals, you can have really good, deep conversations with them: they’re well prepared, they’ve got reams of model outputs, they’ve got their own analytics.’
Given the value focus of the funds he’s been meeting with in these cities, Borgatti adds: ‘These are very concentrated portfolios. They’re heavily in the weeds.’
An IR-only focus
These investors are looking for the details so we might be doing 75 percent of the meetings with IR only
Borgatti also points to these destinations as good IR-only options. ‘These investors are looking for the details so we might be doing 75 percent of the meetings with IR only,’ he explains. But a lot of those meetings might be virtual and sort of ‘whacking through the bushes’ until you get to the point of building an in-person day around LA or Chicago – or Texas, perhaps – and that’s when you bring in the C-suite.
‘So probably one meeting is in person with your CEO and CFO, and three are tactical updates,’ says Borgatti.
Piggybacking on conferences
In Europe, Marcin Droba, head of IR at chatbot firm Text, talks about London as a must-visit, something he does typically twice a year. The firm has already traveled from its headquarters in Wrocław, Poland to London once in 2024.
‘We were in London in January – we went with a very good brokerage house, but one that is based in central Europe and not so well positioned in London. And honestly, we had a very ineffective conference,’ explains Droba.
‘Fortunately, however, we talk to investors every day on Zoom so when we are in London for a conference, we go for maybe three days instead of just one. We contact key investors, we contact investors that have recently bought us and we try to meet them in person. Those [additional] meetings we arranged were very good and very effective.’
This trend of ‘adding on’ to existing roadshow or conference plans has always been part of the IR calendar but it’s something that, anecdotally, we hear more teams doing in an era of squeezed budgets and head counts, when virtual has been tried and proven to be effective and when everyone has an eye on sustainability and travel emissions.
This is something Droba also highlights. He says that while the company will always choose face-to-face investor meetings over virtual where possible, the benefits have to be balanced against the IR workload.
‘At the moment, we still don’t travel so much and you have to look at the costs – and not just direct costs,’ he says. ‘It’s also about your time and the work that needs to get done. But if there is the opportunity – and sometimes investors come to us in Poland, too – it’s always worth taking the time to meet.’
Prague in winter
One conference that always delivers for Droba – and that he describes as ‘extremely important in our calendar’ – is the WOOD Winter Wonderland EMEA Conference, organized by WOOD & Co and held in Prague, Czechia each December.
‘If you are a company from our region, it is very important to be there because it’s the largest event in our region and you have a lot of investors from around the world: from Korea, Australia and Hong Kong as well as the US,’ Droba explains, adding that starting two years ago Text began attending for two days.
As effective as the event is – and Droba mentions the after-hours networking as a great way to get informal time with investors as well as colleagues – he says it also provides a great end to the year: ‘If you have a team that has worked hard for the whole year, Prague is a beautiful city and Prague in winter is an absolutely great place to have the last event of the year.’
