SEPTEMBERFEBRUARY 20152011 the voice of the investor relations profession INFLUENCING SELL-SIDE COVERAGE Growing and/or managing sell-side analyst coverage is a key element of IR strategy. A Closer Look at NIRI Approves NIRI Appoints 4 Sell-Side Coverage 20 New Strategic Plan 21 James Cudahy as President and CEO FEBRUARY 2015 Vice President, Communications and Practice Information & Editorial Director Matt Brusch Searching for Editor-in-Chief Al Rickard the Holy Grail [email protected] 6 What small caps can do to make the Advertising Sales search for sell-side coverage easier. Mike Hyatt By David Calusdian Manager, Professional Development 703-562-7684 [email protected] Art Direction Thor Design Studio [email protected] Managing Sell-Side Contributing Editor Linda Daily Analyst Coverage Consensus estimates based on Contributing Staff cumulative analyst coverage influence James Taube 10 investors in a big way – large-cap Letters to the Editor companies must work to ensure that IR Update welcomes letters to the editor. analysts provide educated estimates. Please send feedback to arickard@ By Margo Vanover Porter associationvision.com. About NIRI Founded in 1969, the National Investor Relations Institute (www.niri.org) is the professional association of corporate officers and investor relations consultants responsible More Companies for communication among corporate management, shareholders, securities analysts Providing Guidance and other financial community constituents. 16 A new NIRI survey finds most NIRI is the largest professional investor companies are in the business of relations association in the world, with more discussing their outlook. than 3,300 members representing over 1,600 publicly held companies and $9 trillion in By Alexandra Walsh stock market capitalization. NIRI is dedicated to advancing the practice of investor relations and the professional competency and stature of its members. About IR Update DEPARTMENTS IR Update is published monthly by the National Investor Relations Institute as a service to its members. 4 At the Bell 20 NIRI Now ISSN 1098-5220 Taking a Closer Look at Sell-Side Coverage • NIRI Board Approves New Strategic Plan © 2015 by the National Investor By Mark Donohue • NIRI Appoints James M. Cudahy, CAE, Relations Institute. All rights reserved. President and CEO For Change of Address, Contact: • Quick Takes NIRI–IR Update • In Memoriam: Howard A. Christensen 225 Reinekers Lane, Suite 560 • Professional Development Calendar Alexandria, VA 22314-2875 USA phone: (703) 562-7700 [email protected] www.niri.org IR update FEBRUARY 2015 3 Editorial Advisory Board AT THE BELL DarinAlexandra Arita Deignan INGSchnitzer North Steel America Industries, Inc. MikeScott BecksteadDudley StillwaterThe Laclede Mining Group Company MarjAlan CharlierEngbring Taking a Closer Look at ConatusInvestor RelationsPharmaceuticals Consultant Hala Elsherbini Sell-Side Coverage Halliburton Investor Relations t’s hard to believe it’s been 15 years since Y2K…aka, the Year 2000 Problem. There was JamesLaura Gagnon(J.T.) Farley InvestmentThe Mosaic TechnologyCompany Group, Inc. an incredible amount of fear and hype that there would be an interruption of operations Clint Halverson around the world. Computers were predicted to fail and hundreds of billions of dollars Laura Gagnon I TheExtra Mosaic Space CompanyStorage Inc. were spent on preparation. When New Year’s Day arrived, there was hardly a blip. Julie Kegley How long have we been hearing about the eventual death of sell-side research coverage? The Julie Kegley Tyson Foods, Inc. sell side might not be what it was in the year 2000, but it’s still alive and kicking. This issue of AndreaDave Parker Passalacqua IR Update takes a closer look at sell-side coverage. If you’re a small-cap company, you’ll find TheMEDNAX, New York Inc. Times Company advice on ways to increase your coverage. You’ll also learn about sell-side coverage from the Andrea Passalacqua Heather Rowe The New York Times Company other side of the coin in an article that provides tips to large- and mega-caps that have many Kythera Biopharmaceuticals, Inc. analysts, some of whom aren’t engaged in their story but are influencing consensus. Heather Rowe Maryellen Thielen Kythera Biopharmaceuticals, Inc. One great NIRI member benefit is our research program. In 2014, NIRI conducted IR The Allstate Corporation practice studies on such topics as IRO compensation, earnings calls, and retail shareholder Tony Takazawa EMC Corporation programs, among others. This issue of IR Update highlights the recent member research NIRI Board of Directors report on providing guidance. If you haven’t already read the report, I highly recommend NIRIMark BoardDonohue, of NIRIDirectors Chairman downloading it from the NIRI website. Impax Laboratories At our December 2014 meeting, the board approved the OneNIRI 2015-2018 Strategic Hulus Alpay, NIRI Chairman Lee M. Ahlstrom Medidata Solutions Worldwide Plan. The plan’s vision continues to focus on ensuring that we leverage the unparalleled Paragon Offshore Jane Okun Bomba depth of expertise within our organization and expand the strong NIRI brand. The plan Liz Bauer IHS Inc. includes an aggressive set of goals and objectives across four primary areas: professional CSG Systems International, Inc. development, community, information, and advocacy. In 2015, we will communicate Robert Burton Lambert,Robert Burton Edwards & Associates numerous elements of the plan including the launch of an IR certification credential program Lambert, Edwards & Associates John Chevalier supported by a practitioner-developed, peer-validated, practice-domain framework. TheDavid Procter Calusdian & Gamble Company I look forward to completing the new NIRI website in the second half of 2015. The site Sharon Merrill Associates Ruth Cotter will leverage online tools to provide a customizable platform that incorporates multimedia AdvancedLaura A. Graves Micro Devices Polycom, Inc. and other channels to engage members through an individualized online experience. In addi- Mark Donohue tion, we will continue to expand NIRI professional leadership globally and extend efforts to ImpaxAnne Guimard Laboratories, Inc. FINEO Investor Relations support IR practitioners and communities throughout the world. Anne Guimard This is also a good time to start planning for the NIRI Annual Conference in Chicago, FINEOValerie HaertelInvestor Relations BNY Mellon June 14-17. This marks the first time the conference will be in the “Windy City.” Block the Dennie Kimbrough time on your calendar and register now (www.niri.org.conference). DennieMicrosoft Kimbrough Corporation Microsoft Corporation If you have any questions or comments, please feel free to e-mail or call. Mary Beth Kissane FeliseWalek Kissell& Associates HSN, Inc. Felise Kissell AngelineHSN, Inc. McCabe AndrewOuterwall Kramer Inc. NilsInteractive Paellmann Data Corporation Mark Donohue JeffreyT-Mobile D. USMorgan Chair, NIRI DeborahNational InvestorPawlowski Relations Institute Vice President, Investor Relations and DeborahKei Advisors Pawlowski LLC Kei Advisors LLC Corporate Communications Moriah Shilton Impax Laboratories MichelleTessera Technologies, Levine Schwartz Inc. [email protected] MoriahCharles ShiltonTriano TesseraPfizer Inc. Technologies, Inc. CharlesMark Warren Triano 4 FEBRUARY 2015 IR update VulcanPfizer Inc. Materials Company Valuation = f (growth, returns, investor perceptions) Corbin Perception assists publicly-traded companies with systematically understanding and positively influencing critical investor perceptions. We provide CEOs, CFOs and IROs with company-specific quantitative and qualitative feedback from investors and prospects and then draw upon our firm’s considerable expertise to guide management in shaping those perceptions and maximizing valuation. Our clients range from highly sophisticated mega-caps to micro-caps across industry sectors. To learn more about our services, visit CorbinPerception.com or call (860) 321-7309. Perception Studies | Investor Targeting | Investor Presentations | Investor Days | Investor Communication | Strategy Development & Positioning Corbin Ad_8.5x11.indd 1 2014-05-05 5:54 PM Searching for the Holy Grail What small caps can do to make the search for sell-side coverage easier. By David Calusdian 6 FEBRUARY 2015 IR update SELL SIDE nvestor relations officers of micro- As commissions decrease, it takes a higher ronment by having their analysts each cover and small-cap companies often share of trading volumes for a sell-side firm a larger number of companies, making them hear a common question from their to make money on particular stocks and increasingly time constrained. As a result, for CEOs and CFOs: “Why can’t we defray the cost of issuing research coverage. a director of research at an investment bank get sell-side coverage?” Of course, Therefore, it becomes inherently more dif- to decide to dedicate resources to covering a for a sub-$500 million market-cap ficult for small-cap companies with limited particular company, he or she needs to have company, obtaining analyst coverage trading activity to gain coverage. a high level of confidence in the potential for Ican seem more difficult than finding the One potential solution is to expand the a positive return on investment. Holy Grail, climbing Mount Everest, and buy/sell spreads for small-cap companies. In solving the world’s energy crisis – all in the June 2014, the SEC announced a proposal Evaluate Your Coverage same weekend. In