1. What are your top priorities and biggest challenges?
The field of IR has come a long way in the past decade, with generally broad, wholesale improvements in the skill and ability of IR practitioners. The priority for me is to position my firm as a strategic partner to the C-Suite executive team and to understand their corporate objectives. This helps to lead management to a more strategic plan for communications. Investor relations can be just ticking the boxes, making sure management gets to places on time, and providing more administrative activities like that. But I like to guide my clients to a new phase in messaging to the Street, to discover how they communicate and why they communicate that way. At Bishop IR, we want to lead our clients toward an improved communication approach that works for the individual executive as well as the company itself. The ultimate imperative is management credibility, which is everything with investors. When a situation arises that needs a decision, an IR practitioner should always ask the question, "How will this decision impact long term management credibility?" and move forward with that top of mind.
IR draws from the same toolbox as PR and marketing. Those tools are applied in what can be a very different manner. We put out press releases and host conference calls and presentations, but again, the focus is on long term credibility. I think the biggest challenge for me is that the management teams we work with often have more information about their business than we do. A good IR person has the ability to synthesize incoming information quickly, so the challenge is how you take this new information and present management with a range of options for them to move forward. You really have to be prepared for anything. The good IR practitioners appear do that with ease, but it is still a challenge for anybody in the role.
2. How have you seen the role and expectations of the IRO evolve in the past few years?
I remember 15-20 years ago, there was an advertising campaign for a large investment fund family that said, "We get to know the companies, we do the deep research before anybody else does, and find the undiscovered gems that give you a superior return." You don't see those advertisements anymore. That pool of buy-side, active money management is shrinking. Over the past decade, we have seen a rise of different types of buy-side investors: ETF's, quants, and fast money. Activists have become much more prominent in ownership lists as well. Simultaneously, there's been a correlated decline of what I would call the more traditional buy-side, active investors, of the type in that advertisement.
As a result, the IR function has become much more important. IR professionals need to think about who they're talking with on the other end of the phone, or are listening to the conference call, or are reading the press release. For example, when an activist calls, you have to realize you're not talking to a standard 13G investor, and often times you cannot think of activists as an adversarial relationship. How an IR person manages activism can be telling for other passive investors.
Nasdaq IR Insight® is one thing that's been really helpful in keeping a running tally of who I have spoken with and having the ability to correlate conversations with management teams is very influential. The more you can know about the investor and the more you've tracked them, the more valuable the database is and the CRM portion of it.
3. How can the IRO best engage the investment community ?
I like to use any tool that highlights management strengths. For example, if a CEO is a great presenter, I would lean towards finding opportunities where he or she can give a presentation that wows an audience. If they do better in intimate settings, one-on-ones are best.
The key then for investor relations is to create a compelling message and presentation that draws in analysts and investors. You really want to deliver a compelling story when meeting new investors. The other aspect is maintaining current investors. You have to be transparent and clear with company development in your periodic reports, in good times and in bad.
IR is highly rule bound. As a profession, we're generally not at the forefront of adopting the latest communications tools, compared to our PR brethren. We have an increased duty to ensure that all material news is broadly disseminated. According to the SEC, you can use your website as a full disclosure medium, or you can other channels, a company blog or some other source, as a disclosure medium. However, you have to pre-establish it is a disclosure medium ahead of time. I think companies are not broadly adopting those newer channels because as a rule, you want your message broadly distributed. We see firms using some of the newer technologies to get more eyeballs, then direct them to the best broadly disseminated, company issued news source. Whether that's a press release or a conference call script, you want to use the newer tools to drive more interest, but you want to have that main source stand on its own feet
4. What is one important initiative that you've championed or experience that you've had as an IRO?
In July 2017, I founded Bishop IR with a vision of driving investor relations to that deeper understanding of the management needs and psychology, combine it with the corporate strategy and to evolve our clients' communications to an improved place. There's always room to be better and I want to drive a management team to communicate as best as they possibly can, to a very important audience.
5. What resources do you rely on to stay up to date on the capital markets?
I generally start my day small and go big. I begin by searching for Wall Street research on my clients and their peers and send my clients news that impacts them, whether that's research on their own company or research on peers. Then I move broader, where my efforts are to understand the sector. If I have a semiconductor client, for example, what are other semiconductor companies doing? I get that news coming in through Nasdaq IR Insight® and through other financial news outlets. After I finish with my clients and their peers, I go to the indices and the broader markets, then to the more mainstream papers and financial outlets like CNBC and Wall Street Journal. I feel that an IRO should have a competence in understanding the interconnectedness of news and the financial markets. Being up to speed on world events and national news, in a broad sense, is important as well.
6. What advice do you have for the next generation of IRO?
Be prepared for any interaction, whether it's with management or the Street. It helps to prepare your thoughts, and then go into a meeting knowing that you have incomplete information and will probably get more. You have to take in that new information, synthesize it, and then present the options to management.
Investor Relations is about reputation management. When approaching any prospective client, you consider what decision you can make at that point of time to help their long-term reputation. Be steady at the wheel. Develop the strongest strategy you can, ensure the board has confidence in that strategy, and then execute it.
Don't get swayed by hyperactive investors that want you to chase the shiny object or respond to the slightest threat. Investors will call management and try to push them into some course of action, but what management teams really need to do is believe in their strategy and execute it, and lead investors. Show them where the company's going, and then execute on it.
The mantra "under promote, over deliver" applies to investor relations as well. You always want to make sure the Street understands where you're going, but you will want to be conservative in your guidance to make sure that you can over deliver on what you say. Often management teams are optimists by nature and want to really lead the Street and get the Street excited, but what IR has to do is say, "We need some space so that we can over deliver on what we promised." Over delivery on objectives is the main source of credibility.
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