02 Dec Frankfurt Notes – Investor Days: Impressions from the high season
The period from mid-November to mid-December – i.e. after the Q3 announcements until around the third of Advent – has firmly established itself as the peak season for Investor Days. This year, even more companies have secured their place in the calendar. Why is that? This is due to catch-up effects after the low number of events in 2020 and the particularly high level of uncertainty about the future development of the companies, which is also due to the pandemic. We also see longer-term, structural reasons: The sell side is eroding and well-rehearsed multipliers of the equity story are thus falling away. Virtual conference formats have gained in acceptance by leaps and bounds. Our six observations and conclusions after three weeks of investor days:
The present is virtual. Purely virtual events are the fully accepted event standard in the pandemic. Where cameras stood somewhere on the sidelines at on-site events of the past, elaborately designed virtual settings now dominate. Online viewers have become full participants in the event. This includes the equal opportunity to ask questions and, in particular, the chance to present one’s own questions live – thus preventing the arbitrary defusing of questions submitted in writing. The compulsory option is the dial-in option via a parallel telephone conference. The free option is to connect the questioners via video conference – with a virtual belly band showing the name and institution of the questioners.
The future is becoming hybrid. Only a few events took place in mid-November with on-site participants. However, according to our observations, these met with high interest, even from out-of-town participants. This speaks for the value participants attach to chatting with management during the conference breaks or at the pre-event. This is a clear indication of the expected behaviour of participants in the coming year and beyond.
Use new technical possibilities. Even large and complex companies follow the digital best practice of limiting virtual events to a maximum of three hours. Pre-recorded presentations are frequently used and reduce the risk of errors compared to earlier live-only events. Not yet convincing from our point of view: procedures remain predominantly very close to earlier presence formats – and the possibilities of cinematic and multimedia contributions are not yet exhausted. A varied, entertaining programme keeps viewers in front of the screen and thus also increases the chance of successfully placing content.
Break down barriers – don’t build walls. An investor day is primarily aimed at institutional investors and sell-side analysts who professionally follow a share and are allowed to ask questions. But the messages are also relevant for private investors, the media or other stakeholders such as clients, employees and NGOs. Those who refuse to allow private investors to watch live, for example, send a problematic and unnecessary signal of disrespect. Share prices develop live and not in a replay. A company announcement sent out at the start of the event increases transparency for all target groups and allows the first accents to be set for announcements and market resonance.
The ESG wave is rolling. Don’t be surprised if veteran (light-skinned, male) analysts suddenly ask you questions about board diversity. The ESG wave is rolling inexorably. An investor day cannot solve the difficult quantitative part of the ESG task. But it does provide space for the vision and seriousness with which a management team wants to approach the issue. Occasionally ESG is still very much on the sidelines in presentations, but no one can really do without it any more.
Make goals credible and comprehensible. New medium-term goals have been the exception rather than the rule in the Investor Day season so far. However, we see our thesis confirmed: the market reacts particularly positively when new goals are supported by comprehensible KPIs and/or realistic segment goals.
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