Has equity research changed for ever? Direct engagement with company managements used to be key to understanding businesses, but lockdowns changed that model. At first investment analysts welcomed working from home, but that now has given way to Zoom fatigue. Many more meetings are now possible but are they as effective? Soon, face-to-face meetings will again be possible, and thought is needed to assess what value that might add.
For investors outside London, online calls give much more access, more frequent meetings. Investment boutiques in particular, have gained. This has been helpful in the last 12 months, a period of high activity in IPOs and share placings. That meant lots of new businesses to research, early-look meetings, and fundraisings.
Access to company management – on or offline – helps to build up an understanding of strategy and whether the trend of government policy and industry evolution is favourable. Online calls have been helpful, allowing more access and offering more checkpoints on progress during the year. With a much faster pace of change now, this greater number of touch points is invaluable, particularly in monitoring growth businesses. It has been possible to see companies two to four times in a year, rather than just once or twice. When supply chains and prices are changing more rapidly, this can give insight into just how agile and dominant in their niche companies are.
To get the most out of the access investors should set out their own agenda. That means taking management away from their slide deck, and focusing on the key changes from the last update. Frequent Zoom updates have given good insight into which companies were dealing well with the lockdown challenges. Company accounts are part of the research work, but in an age of disruption, strategy is key. It is likely that unwinding of lockdowns and a move to hybrid working will bring a continuation of online calls as the predominant method of corporate access.