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Investor relations yesterday and today

"You can limit yourself just to mandatory reporting, however sooner or later this will mean harder or more costly access to capital or simply lower valuation". Michał Szapiro talking with Łukasz Wójcik, an active investor and former journalist of the Parkiet on the shape of investor relations and basic mistakes in planning IR activities

Michał Szapiro: Financial markets have always evoked strong feelings, which are an arena for major success or failure. They reflect moods in the economy; they become the subject of political and social disputes – how do you see you part in it as a specialist in communication?

Lukasz Wojcik: The role of investor relations has grown significantly in recent years. I remember how even a few years ago it primarily boiled down to transactions, IPOs for instance; later companies relied only on current and interim reports for communication. However things have changed. Investor relations have become standard practice. I would compare our role to that of a lawyer or accountant. You can operate without them, not in the long run though. The same with listed companies. You can limit yourself just to mandatory reporting, however sooner or later this will mean harder or more costly access to capital or simply lower valuation. With good investor relations it is simply easier to be on the market and to move on it. However you want to remember that investor relations will not cover up and replace the key factors for investors i.e. a good market, the proper business model or a competent Board of Directors. Investor relations help emphasise strengths and address weaknesses well.

Financial communication is for the smart or the thrifty? The names of great fraudsters and rich people are often mentioned in the media; widespread public aversion promotes movements like 99% – what are your views on it?

The stock market was always associated with big and – for laymen – easy money. Where there is big money, there are also fraudsters. The stock exchange is no exception. I think the world has still not recovered from what happened on September 15th 2008 when Lehman Brothers fell. Many people who directly or indirectly experienced the impact of the crisis are negating the current world order, such as the 99% movement you mentioned. I think though that as long as the stock market exists, there will be spectacular crises or fraudsters who will take the shorter way. All this does to a greater or lesser extent reduce the trust in financial markets.

It is the job of financial communication specialists also to educate in order to eradicate the misconceptions in perceiving the capital market. It is worth noting here that a change of the approach of issuers itself as well as the development of investor relations build trust in the market as such.

Additionally, when we fall prey of our own mistakes and lose money, then we look for the guilty party elsewhere and claim the stock market is a sham, gambling etc. On top of that mainstream media also contribute their two cents’ worth by dealing with stock market issues very superficially and in a tabloid manner. No surprise there actually: yesterday there were writing about the Smolensk plane crash, today about the stock market, tomorrow about the presidential elections. It is the job of financial communication specialists also to educate in order to eradicate the misconceptions in perceiving the capital market. It is worth noting here that a change of the approach of issuers itself as well as the development of investor relations build trust in the market as such. I think that our stock exchange, despite its many weaknesses, low liquidity above all, looks different than 20 years ago. It has become more civilised. There is still a lot of work for us to do to come level with western markets, but it is better. I can say this having been watching the market for more than a decade from various angles: as an investor, financial reporter or someone dealing with financial PR and investor relations.

Towards the end of 2013 BNY Mellon carried out a survey of global IR trends on a sample of close to 700 companies from 63 countries, diverse sectors and different levels of market cap. The results noted i.a. that merely 27% of the companies use social media as an IR tool – do you see potential there, for example LinkedIn, YouTube? Maybe others?

Yes of course. Social media have permanently changed the way people communicate. I remember hearing more than ten years ago in high school about the term “death of distance” in transportation terms. Today covering a certain distance is perceived quite differently than several decades ago. I think it is quite similar with social media in relations between people. They reduce the “distance”. Naturally this part of our life is also finding its way into investor relations. Nevertheless I personally think that social media – as in life – will not replace the fundamental methods of communication. This is simply yet another tool, which it is good to have handy and to use it in the right situations. Twitter, for one, has potential in terms of supplementing direct contacts with investors. For sure LinkedIn, which I treat as the equivalent of Facebook in professional relations, is useful. YouTube in turn can be a very valuable complement of video communication. However the crucial card in the hands of companies is their own business and strategy, while the role of investor relations specialists is to choose the right instruments. This may seem simple, but practice often proves otherwise.


Next to very good websites, which provide valuable information, there are also such that are not updated for years and look like someone’s punishment.

According to the above survey more than 84% consider Bloomberg and Reuters to be of key importance in IR communication; is it similar in Poland or do the local media better reach financial circles? According to the Polish National Investor Survey current and interim reports are the most valuable source of information.

I think this depends on the group. Certainly for both institutional as well as individual investors the fundamental source of information are and should be current and interim reports. Certainly information agencies such as Bloomberg or Reuters are a vital source of information due to their nature. Highest quality of information delivered in a possibly fast way. On the one hand this is an advantage over traditional printed media, which act with a delay, and over websites, which still have a lot of potential in terms of quality. It has been known for some time that Bloomberg and Reuters teams are held accountable to the second as to who gave the information first. Hardly surprising therefore what institutional investors say. Let us remember however that individual investors do not always have access to paid services such as Bloomberg and Reuters and they use other sources. One of the three most important ones are investor relations tabs on the issuers’ websites. It is enough to make even a cursory analysis of the websites of Polish issuers to see how much remains to be done. Next to very good websites, which provide valuable information, there are also such that are not updated for years and look like someone’s punishment. What can a potential investor, even an institutional one, think about such a company? He will apply a discount, even subconsciously, because if the company doesn’t care about its online presentation, then there are bound to be many more such weak points. A good website and investor relations service is the ABC of today. In terms of investor relations it is a bit like skipping lessons in multiplication tables, but being active in class when integrals are being explained. Without a solid website there are no good investor relations.

In the increasingly faster and fuller circulation of information it gets harder and harder separate investor communication from traditional PR. Although both teams are responsible for promoting the company, they seldom cooperate – what is the recipe for harmonious cooperation? Is it different in small, medium and large companies?

I remember that when I began working in investor relations there was a clear split into communication to financial media and investor relations. I also have the impression that some “experts” still wrongly think investor relations are the same as communication by means of financial media. I personally am of the view that you should not and never should have separated the two. They are naturally complementary. It is just as much a mistake to omit financial media in communication, as it is in basing communication strategy only on them. I think that owing to their history many PR and IR agencies have a problem with stepping out of their box and taking a broader view of communication. It is similar with some listed companies. Some still treat the media as the main component of their strategy, while other focus on direct relations with investors. If we add a new instrument to this “brew”, such as interactive services or the aforementioned social media, then you could probably recruit three or four consultants to do investor relations properly. I think that our market – though being shallow, or maybe mainly because of this – will move towards consolidating various competencies. I am not actually thinking about equity consolidation. In my opinion only such an approach will ensure maximum efficiency of investor relations both in terms of costs as well as competence. TAILORS Group in fact stands on this assumption. We see that public companies seek synergies and understanding. This saves time and money. It is better to have a one-stop shop to take care of proper relations with investors and media or to prepare corporate communication. A narrow niche has its advantages, but there are more downsides to it in my view.

Finally let us dwell on what will come. The Millennium generation – materialists, egoists living partly in a virtual world. A new generation of investors is becoming of age – will it determine a completely new approach to the management of relations with this community – will the role of digital and interactive solutions grow, or maybe fully personalised content? What is your view on it?

I think the fundamentals will remain the same. It is a good idea to look into the books of Benjamin Graham, the father of fundamental analysis. Today you can only too clearly the many analogies to what happened several decades ago, reading “The Intelligent Investor”. Speculative bubbles continue to swell and to burst. Money must be on the move and certain things will never change, though they do look different at first sight. I think this derives from the structure of man and his nature. In this context it is worth remembering this when conducting investor relations. It is however also good to bear in mind what you mentioned. We are part of the technology revolution and investor relations, being a part of life, are also affected. Today technology gives us great opportunities, which really should, indeed must be used in communication. Thanks to the internet and mobile technologies waiting for information has been shortened to a minimum. On the other hand this has caused information noise to appear, which we had never encountered before. Our perception is ceasing to embrace all this. We often have a problem trying to identify what is important and what isn’t, what is a fact and what is only gossip. And this actually has considerable influence on decisions – also investment ones. Effective use of technology, bearing the aforementioned fundamentals in mind, is in my mind the future of investor relations, also in the context of new generations of investors looking at the world quite differently than a few years or a few decades back. It is however worth remembering that investors are a group, which cherishes tradition. They still prefer direct contact with the directors of their companies (although here paradoxically Graham did not like this form of communication and it was modified only later by Warren Buffet – his student). It makes sense to note that power point and excel still rule, though new tools are also appearing, such as interactive DataBooks, interactive online reports, effective use of animation or video in presentations. This brings almost unlimited ways to structure the information noise and to extract what is really important. I think it is a good idea to look at these tools now in order not to be left behind when they become part and parcel of daily relations with investors.

Lukasz Wojcik – Banking and finance graduate of the Warsaw School of Economics. Passionate about the capital markets and an active investor. Completed advanced training and courses in finance, enterprise valuation and investor relations. Specializes in investor relations and corporate communications. In 2005–2013 a shareholder and management board member of Poland’s largest financial PR agency. Previously a journalist at Parkiet. He has coordinated and implemented projects for such clients as Cyfrowy Polsat, Multimedia Polska, PKP Cargo, Ronson, Tauron Polska Energia, and many more.