Arzu Cevik from Thomson Financial’s Corporate Services Strategic Research Group discusses targeting investors in Europe and its impact on your stock.
Transcript:
Hi, I’m Arzu Cevik, a director with Thomson’s Strategic Research group.
With the current volatility in the markets, it might be timely to discuss why companies should consider targeting investors in Europe and the impact this could have on your stock price.
Recently, we published a detailed report about targeting investors in Europe. In this report, we provide an overview of the European buy-side markets by country, city and by market cap, detail the pros and cons of targeting in Europe and discuss which targeting strategies work best.
Why target investors in Europe and why now?
There are a couple of reasons why it may be a good time for your company to conduct investor outreach in Europe.
The dollar continues to trade at record lows against the euro thus making U.S. equities more attractive to investors in Europe. With the Euro trading at nearly 1.5x the dollar, many equities are “on sale” for nearly half off and even more so for institutions in the U.K.
Furthermore, some of the volatility in the markets has been caused by large hedge fund redemptions and from other short-term oriented investors.
Given that many investors in Europe tend to be value-oriented and have longer-time horizons, adding a base of investors from Europe to your stock may help provide some stability.
How do you decide which markets to target?
It’s a bit challenging because public information about investors in Europe is not very reliable and what is available significantly understates ets and market size. This is because unlike in the U.S., regulations vary by country in Europe and institutions are not required to file 13Fs.
Thomson Financial compiles its own proprietary, non-public data to estimate the size of the markets, the number of institutions and the amount of investment capital available.
According to our data, as of the first quarter, the top 10 countries in Europe had over $1.5 trillion invested in U.S. equities. This compares with public data which indicates only $730 billion.
It should be no surprise that of the top 10, the U.K. leads the way. We estimate that U.K. institutions have invested over $635 billion in U.S. equities with nearly 95% coming from investors in London.
What strategies should you use to target?
While companies vary in strategy and size, there are key strategic questions that all companies can ask prior to targeting in Europe.
Some of these questions include:
*Identifying and essing your shareholder base.
*Have there been recent sell-offs in your stock?
*Are there opportunities for new investment in your stock or sector?
Is there a need for diversification or stability?
*What are investors mandates in Europe? Are there any restrictions?
*Is there a market-cap minimum?
*What are the costs involved with targeting?
*Is senior management committed to regular visits to European institutions over a multi-year period?
These questions and many more are in our research report entitled, “Targeting Investors in Europe” which was published in November 2007. Also included in the report is a detailed interview with a Fortune 500 executive about his experiences targeting in Europe and investment data for the top countries and cities in Europe based on TF estimates.
For those wishing to view an executive summary of this report or executive summaries of other reports that Strategic Research has disseminated please go to the Corporate Services Center at www.thomson.com/financial/CorporateResources
Thanks for watching and have a great day.
Duration : 0:3:42
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