The celebration during the first half of October of several Investor Days such as that of General Motors, Sacyr, or the presentation of Repsol's new decarbonization strategy gives us the opportunity to share some thoughts on what we understand should be avoided when carrying out such strategic events to manage expectations. It is very common that a Investor Day is convened with the main objective of sharing the latest update of the company's Strategic Plan, but we must also not forget the objective of bringing top corporate and line of business managers closer to the investment and analyst community, who, in some cases, are total strangers to it. In any scenario, in our opinion, it is important to keep in mind some elements that must be avoided so as not to harm the final result in the short and medium term of this communication exercise.
We present them to you by way of Decalogue:
FIRST: the Investor Day should not be considered an event restricted to a privileged few, since it is a matter of communicating relevant information and its celebration in person does not prevent it from being broadcast on streaming so as not to discriminate against any interest group.
SECOND: it is not appropriate to invite representatives of investment banks since this is not an event so that bankers can carry out their business activities with the management team of the listed company, but rather it is an event to share the company's expectations of future evolution with analysts and institutional investors and today, also thanks to the Internet, with retail investors.
THIRD: if you have to communicate any privileged information during the event, such as an announcement of a new dividend policy or medium and long-term projections, register it with the regulator before the market opens, together with all the relevant information about the event, such as presentations, and do not register simultaneously with the live communication of such information, as this could cause unnecessary noise in the market, and even the temporary suspension of the listing by the regulator.
FOURTH: if you share guidance, that are attainable and traceable objectives, never transmit quantitative objectives for the mere fact of looking for an artificial revulsive to the short-term price; keep in mind that from that moment on the market will make you a Tracking regulate the company's evolution towards those objectives.
FIFTH: if your company is going to carry out a restructuring of the first level of the management team, do not communicate it days or weeks after the event, but before or on the occasion of Investor Day because precisely this event is designed so that investors and analysts get to know more closely those responsible for the business units and the main corporate functions, and not those who are going to stop being so.
SIXTH: the update of the Equity Story of the company that you share during the course of the presentations, it is not recommended that it contain the internal valuation of the consolidated company or the business units, since this is a function that the market must perform in relation to the information available to adjust its expectations. The market will always have rigorous arguments to answer the hypotheses of any internal valuation of the company in factors with such little consensus as discount rates, residual values, time horizons of projections, not to mention the estimation of Cash Flows futures.
SEVENTH: leave nothing to improvisation but everything to planning, especially with regard to the preparation of the question and answer sessions, and the communication skills of the managers who are going to present.
EIGHTH: if you have a lot to tell, don't insist on flooding the screens with data and figures that the audience will never be able to hold back, but only the “strength” messages and critical quantities; leave the detail to be delivered as Handout or to upload it to the shareholder and investor web space for Investor Day.
NINTH: don't limit yourself to traditional ones Power Points to prepare the presentations of the event and take the opportunity to improve your skills with graphic design and digital creativity tools that technology and experts in the field make available to you.
TENTH: don't think that the event ends with the last presentation and your session of Q&A. Collect the Feedback of the audience to update your Investor Relations strategy.
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Francisco Blanco Bermúdez
Founding partner of Sigma Rocket
