parlez - vous investor relations?

• Author: GRAY, CAROL LIPPERT

Pay attention to some differences between investors in the U.S. and Europe, and you can put on a jolly good road show.

As markets globalize and technology compresses time and distance, variations in allocation patterns between U.S. and European investors are narrowing commensurately. Eventually, says Scott Ganeles, president of The Carson Group, a New York-based consultancy with a large overseas investor-relations practice, U.S.-based companies will have to commit the resources to put overseas IR operations in place. In the meantime, though, Ganeles says, some differences still exist between shareholders on either side of the Atlantic.

"At this point, there's only a certain amount of European money dedicated to U.S. investments," he explains, "although everything is changing on Internet time. European investors tend to have longer-term investment horizons, although that's changing, too. They don't require the same amount of handholding, because they don't have the time to dig as deep [for shareholder information]. Since your company's stock isn't the primary driver of their portfolio, they may not move as quickly off the same information; they may not have the same interest-rate fears, for example. And the majority of European money managers don't have dedicated industry analysts; they have generalists who study U.S. companies."

Sooner rather than later, though, Ganeles adds, "There will be dedicated industry analysts." And, he thinks, European traders soon will model their investment style after their U.S. cousins'. So how should companies handle IR as this diversity evaporates?

"At all times as CFO, you want a balanced shareholder base of people with different perspectives and time horizons," Ganeles says. "But different size companies should have different strategies and different expectations. European analysts start by asking themselves, 'What companies do I have to follow?' Then they ask, 'What companies can I follow optionally?' Larger-cap companies have a decided advantage because generalists can follow them. The research is so much easier."

Thus, just as European-based multinationals like Royal Dutch and BP have had IR staffs in the U.S. for years, Ganeles notes, "All large-cap U.S. companies should have Europe on their radar, although certain industries translate better over there: oil, telecommunications, technology and other global players, rather than a traditional domestic retailer."

Because of the sophistication and size of...