RD:IR attracts a brood of ducklings!

Every year a collective ‘Ahhhh’ reverberates around the RD:IR office as it is discovered that a mother duck, who seems to have become fond of our window box, has taken up her annual residency to raise her twelve ducklings.

Unfortunately, a past experience has taught us that nesting at second-floor height, in a busy commuter area, is not safe for the ducklings and as such the RSPCA were called this afternoon, in order to re-house the newborns.

As sad as we are to see them go, the ducklings will be taken to a wildlife park outside the city to be reared in a more sheltered environment.

Until next year… sniff sniff.



RD:IR announces major new contract wins in FTSE 100 & FTSE 250


Richard Davies Investor Relations (“RD:IR”) is thrilled to announce new contract wins within the FTSE 100, as BT Group plc and Marks and Spencer Group plc join its growing list of blue-chip clients.

RD:IR is also delighted to welcome FTSE 250 constituents, AA plc, Ophir Energy plc and Tullow Oil plc to its mid-cap stable. RD:IR acts for one-third of this Index.

RD:IR is pleased to act for over 630 public company clients in the UK and internationally, across a range of sectors and market capitalisations.

New FTSE 100 clients

BT Group plc, one of the world’s leading fixed line telecommunications groups, and international multi-channel retailer, Marks and Spencer Group plc, have both taken RD:IR’s integrated IR InTouch service, combining rigorous share register analysis, powerful targeting, in-depth profiling and tailored investor relations contact relationship management in one online platform.

New FTSE 250 clients

Roadside assistance provider, AA plc, and oil and gas, exploration and production companies, Ophir Energy plc and Tullow Oil plc, have all chosen to employ RD:IR’s proprietary IR InTouch platform to assist and manage their investor relations activity.

Richard Davies, Managing Director of RD:IR, said, “We are very pleased to make more client gains within the FTSE 100 and FTSE 250. We welcome all our new clients, large and small, and look forward to working with the investor relations teams of these businesses in the coming months and years.




For further information please contact:


Richard Davies, Managing Director

+44 20 7492 0501 or Richard.Davies@rdir.com


Sarah Blackshaw, Head of Marketing

+44 20 7492 0533 or Sarah.Blackshaw@rdir.com

Shifting Sentiment

Leading European equity indices are 7–12% more expensive now than at the start of 2015. For example, the FTSE-100 index  currently trades at a calendar year 2015 estimated  P/E multiple of 18.9x (source: FactSet consensus data), an expansion of 148 basis points compared with 17.5x at the start of the year,  an 8.4% re-rating.

We note that increasingly stronger equity valuations are not a purely European issue, as the STOXX Global 1800 index has re-rated by 10.2% over the same period.



Furthermore, current P/E multiples are not only expanding, they are also getting close to historical highs. For example, the entire UK equity market (FactSet aggregate data) currently trades at a CY’15E P/E of 16.7x, representing a 14% premium to the 2000–2014 historical average of 14.6x.


Consequently, both sell-side analysts and investors are getting nervous and market sentiment has deteriorated in recent months.

The share of sell-side buy/overweight recommendations has been falling across the board on the back of very strong price performance year-to-date, particularly in Continental Europe, boosted by the ECB’s quantitative easing measures. For example, the share of positive (buy/overweight) ratings among all DAX companies is 38.1% today, a drop of almost ten percentage points from 47.6% of positive at the start of the year.

To rate a stock positively, analysts have to offer some upside to their price target (usually at least 10%). With raising share prices, analysts have basically two ways to continue offering upside potential: 1) raise earnings estimates, which has to be supported by strong trading updates, or 2) apply higher target multiples to earnings forecasts. In other words, stock ratings are being downgraded because analysts can’t justify increasing their earnings projections in a fairly muted macro environment. Again, this is even more evident in Continental Europe, where quantitative easing is first and foremost aimed at reviving sluggish Eurozone economies.


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Investors are also getting more nervous about equities. The April 2015 Bank of America Merrill Lynch fund manager survey highlights the deterioration in investor perception of European stocks since the start of the year.

A net 8% of worldwide respondents said that European equities were overvalued in February, rising to 23% in March and then 25% in April survey. Manish Kabra, European Equity and Quantitative Strategist at Merrill Lynch noted: “We are seeing a form of rational exuberance in Europe where a positive view on stocks is supported by fundamentals – but investors no longer believe valuations are cheap.

The belief that European equities are now overvalued is not limited to international investors. In March a net 3% of European managers believed European equities were undervalued, yet in the April survey, sentiment shifted significantly, with a net 10% now saying Europe is overvalued.

While this sentiment prevails, it is worth noting that global investors see the US as the most overvalued market, with 68% of respondents holding this view. However, we would add that, in comparison, the US is in a much better position in terms of earnings recovery potential.


What does it all mean for quoted companies?

When equity valuations are getting stronger and trending above the historical average, it becomes increasingly challenging for active fund managers to generate alpha (and justify charging more than tracker funds). This may well mean an increased focus on portfolio rationalisation and a more thorough review of what constitutes top picks and best investment ideas.

In this context, and also given the changing dynamics of the corporate access market in the UK, quoted companies, particularly the smaller ones, need to be even more proactive with their engagement with shareholders and potential investors.

Investor targeting is not simply about identifying and prioritising investors, whether current shareholders that could invest more, or absentee investors that could re-invest or invest for the first time. Good targeting is also about developing high quality relationships with target investors in order to gauge their sentiment towards your stock and to provide them with adequate information about your stock in order that they can make an informed choice about monitoring your stock and/or meeting with you.

A list of targets is only useful if acted upon methodically and quickly, via direct outreach, to investors on a global basis. Such an exercise can be very time-consuming for in-house IR teams, as a targeting campaign may involve hundreds of target investors. The companies that most need this type of campaign are very often also those with more limited internal resources.

RD:IR is well-versed in helping corporates reach out to investors, gathering useful feedback from the buy-side within a short period of time, as well as providing quarterly updates on target sentiment, keeping the target lists fresh and current.

Please do not hesitate to contact us to discuss our Targeting / Investor Access services or any of our other IR services in more detail.


Authors: Mark Robinson (Senior Client Manager – European Issuer Services) & Philippe Ronceau (Senior IR Consultant)

Mark Robinson joins RD:IR as a Senior Client Manager


RD:IR is delighted to welcome Mark Robinson, who joins the company as a Senior Client Manager (European Issuer Services). Mark will be responsible for our European clients and will work closely with both the Analytics and IR Services teams, as we expand our relationships with new and existing clients on the Continent.

Mark graduated from the University of East Anglia in 2005 with a BSc in Mathematics and started his career working for Camelot where he was responsible for analysing the retail sales of the National Lottery products. From there, he moved to Thomson Financial, joining the Corporate Advisory Services team to cover corporates in the UK and Northern Europe and developing shareholder identification reports.

Mark joins RD:IR from a global financial data provider, where he was responsible for clients across central and emerging Europe. He brings with him a wealth of experience and has been involved with panel discussions outside of the UK, including, discussing liquidity at the TUYID (Turkish IR Society) annual event, and also leading discussions on the impact of ETF investments at the AGM of CIRA (Circle for Investor Relations Austria).

Richard Davies, Managing Director of RD:IR, said, “I am thrilled that Mark has joined us. This is a particularly exciting time in the company’s development as we expand into Europe. Mark has a great understanding of investor relations and we look forward to introducing him to our clients and prospective clients.”

Why 2015 will be a year of great change for IROs

The world of investor relations is changing and there are major challenges ahead, particularly for small- and medium-sized business, suggests RD:IR’s Managing Director, Richard Davies.


We live in strange times. As I write, the FTSE has reached record highs but, for those of us living in Europe, the world has not seemed as dangerous for many years. If you are not directly exposed to West Africa, the Ebola scare may have faded into the distance as quickly and quietly as the last outbreak of foot-and-mouth but we now have greater and even graver concerns. The sabre-rattling of the Russian state threatens the stability of European Union members in the East, and the savage chaos of the so-called Islamic State spreading ever wider across North Africa and the Middle East has even penetrated, according to recent reports, the southern border of Turkey.

The UK economy is growing strongly once again but uncertainty looms about the shape of the next government, with most polls predicting no overall majority. For the first time, political parties outside the main three could have a pivotal role in shaping policy, which the bond markets will not find encouraging. While much is made of the commendably rise in employment numbers, neither side of the House wants to talk about the thorny issue of the £1.5 trillion mountain of public debt, which has, on a non-inflation adjusted basis, risen more under five years of the Coalition than under the thirteen years of the last regime. European markets, encouraged by a vast programme of ECB quantitative easing, are currently performing strongly, even despite the threat of Grexit. However, despite the irrational ebullience, we cannot ignore the spectre of deflation which European bond markets tacitly forecast through the widespread purchase of negative rate instruments. Things will definitely get worse before they get better, fixed income fund managers now clearly believe.

We can, however, attenuate our concerns about rising currency risk for UK exports from stronger sterling by the thought of cheaper holidays on the beaches of Europe, particularly if Grexit goes ahead. That fine bottle of Château Margaux you have been coveting is getting cheaper by the day! Nobody expects oil prices to rise quickly any time soon and while this is good news for the users of oil, the fracking sector is looking increasingly desperate. Given the increasing evidence of environmental damage wreaked by this controversial process, some may see this as no bad thing. There is rich irony in Saudi intervention in oil markets producing a positive result for the ecology movement.

Disruptive regulation

The world is becoming a more difficult place for the UK banking sector, facing uncertainty from the outcome of the next election and increasing public and regulatory scrutiny. Long established practices in the areas of research and corporate access are now under fire in the quest for greater market transparency, with the expected perverse outcome of finding funding for small- and mid-cap companies even more difficult. The regulator is now the prime source of market disruption, by dint of its breaking up of the historically opaque structure of fee payments between asset managers and stockbrokers. We are entering a new market paradigm of which the outcomes are as yet unknown, although most assume that independent providers of research and corporate access will take over an increasing share of business from the sell-side outside the bulge bracket.

Life for large-cap companies will go on much as usual in the new environment due to higher trading volumes justifying the supply by investment banks of corporate advisory services. Lower down the food chain, things will get more difficult. There are already rumblings of some big-name mid-market brokers ditching their corporate access departments and trimming back on their research teams significantly as they move to a near execution-only model. It seems likely that brokers will become sector specialists if they continue to have research analysts at all.

Stewardship and engagement

The grey area remains on the valuation of investor meetings in terms of their worth to investors. Fund managers still perceive there to be great value in meeting companies’ senior management – and not just to glean information not in the public domain, as many believe.

Stewardship and engagement are now viewed as an essential part of the investment process but some doubt that investor meetings are not really situations where price-sensitive information is disclosed on a selective basis. The assumption is that if investors rely so heavily on investor meetings as part of their investment research process, these meetings must by default contain the imparting of price-sensitive information to investor benefit.

While some canny hedge fund managers may well occasionally glean additional insights from senior management on the way to the lift, we all know that most investor meetings are mainly about providing the context to fund managers for the stock selection, as well as building a level of personal trust between investor and investee company senior management.

No amount of meeting technology such as video conferencing is going to change this attitude in the short to medium term. Given that the changes in regulation move the emphasis of responsibility in terms of payment to those receiving the benefit from those providing the service, it remains unclear how investors should value investor meetings in terms of monetary sums and as ever the regulator is unwilling to provide clear guidance, leaving open a potential regulatory minefield.

The idea that the market will find its own balance in this matter due to the emergence of new formations of access and research services seems highly hazardous.

Market participants

The upshot for small- and medium-sized companies is they will increasingly have to pay for their own access and research, and install a dedicated IR professional to manage these services where one is not present (as in the majority of UK quoted companies at this time). Unless there is a deal in the offing, most brokers will not be interested in providing free services, if at all, to these companies, so they will become commoditised practices over time.

Active asset managers are still reeling from the massive rise in cashflows heading into indexed and quant products, including ETFs, as investors wake up to the disparity between charges and performance for many funds. Why choose a live fund manager when a robot can do just as well but for a fraction of the fees? UK fund managers are in a difficult place: they are no longer allowed to pay for investor access from client money; they may be unclear about the value they should apply to company meetings in their accounting; and some still believe that the market will go back to its old ways despite the imminent arrival of MIFID2 which gold-plates the actions of the FCA.

The life of the IRO will change as a result of the regulatory shake-up: there will be fewer market participants to deal with on the buy- and sell-side over time but there will be a greater demand on time to manage those that remain. Targeting, ongoing investor interface in a systemic manner and a greater emphasis on buyside analyst modelling will become generic issues and not just the domain of the large caps.

A long road ahead

2015 will be a year of significant change for IR in the UK and internationally as a result of the regulatory changes relating to access and research. We are only at the beginning of a significant restructuring of the market which will create new challenges to IROs in terms of handling of the communication and distribution of their equity story, and managing the demand for their shares in increasingly concentrated capital markets. Life will become increasingly more difficult for smaller companies, abandoned by capital markets not incentivised to support their growth. On the upside, the changes should mean an expansion in the number of IR professionals at smaller public companies. The marketisation of research is already creating higher quality analysis of companies, especially as new providers utilise the insights of deep data mining better to understand companies and the global competitive landscapes within which they operate. The marketisation of corporate access should encourage better quality investor roadshows, where the interests of the access provider/organizer are aligned with the company, and not the analyst bonus.

Like many other industries, investor relations, corporate broking and asset management are facing disruption on a major scale at home and abroad but unlike in other sectors, the disruption is being invoked by regulatory change, rather than new technologies and related market entrants. We know the route of travel but we may not yet understand so well the destination.