RE: How informed are IR magazine award pickers?

'How informed are IR magazine award pickers?' asked Dominic Jones on his blog last week.

Not very, he decided based on a story we posted last week about Project Turquoise, a new alternative trading system and the focus of a question we asked analysts and investors in our IR Magazine UK Awards survey. Our story included this 'nugget', as Dominic calls it: 'Only 22 percent of respondents believe ATSs pose a threat, while the rest were unsure or felt unable to comment.'

Dominic can obviously drive a calculator: 100 minus 22 equals 78, so he concluded that 78 percent of the portfolio managers and analysts surveyed for our UK Awards are 'a bunch of ignoramuses.' Either that or the Chinese Wall between research and trading is remarkably solid in the UK.

But here's another nugget from a little higher up in the same paragraph of our story: '40 percent of the 400 sell-side analysts, buy-side analysts and portfolio managers questioned in the survey are amenable to the ATS.'

So back to the calculator, and it turns out that only 38 percent of UK investors and analysts are a bunch of ignoramuses.

No biggie. So long as we can rehabilitate that 40 percent of respondents or 160 ignoramuses (boy it's fun to use that word so many times – thanks Dom), then this is but a minor quibble between friends like Dominic Jones and IR magazine.

And let's face it, a 38 percent 'no opinion' result is still pretty high. But to defend UK analysts and portfolio managers, very few of them sit on the trading desk, so unless they actually cover financial services, ATSs are not too high on their list of priorities. When they run into their trader buddies at the company picnic, it would be pretty sad if the chat was all about Project Turquoise.

Now while I dispute Dominic's main point, I heartily agree with his opening (and this is really what I want to rant about today): 'For all of their prominence in the profession, it's a remarkable thing that so little is known about how the esteemed IR Magazine Awards for investor relations are chosen.' He cites another IR blogger, Peter Noel Schiefelbein, who correctly assumes that 'it has something to do with tallying the votes of survey participants.'

I've tried! Oh, I've tried and tried, through every possible medium, to make our awards process clear. It's salve for my tortured soul that Dominic seems to understand my personal hell, my headbanging frustration, every time someone asks me how we pick our winners.

Here's how I usually handle it in the US: I take a few deep breaths then slowly repeat what I've uttered, written and emailed a zillion times over the last 140 days or so, since our latest US awards survey concluded: 'For the IR Magazine US Awards 2007, 1,734 investment professionals and 1,210 retail investors nominated over 1,600 companies in 19 awards categories.'

The numbers change from year to year and from region to region in the ten places we present IR Magazine Awards. But the main mantra is the same, and I chant it like a prayer every time I climb on stage trussed up in my tux, in London or New York or Toronto or wherever: 'Who can tell us which companies are the best in investor relations? Or even what good IR is? The only possible judges are the investors and analysts who cover your companies.'

In a blatant case of self-plagiarism, I've put those few sentences in magazine articles, marketing brochures and emails, awards scripts and supplements. I've said them in TV interviews in New York, Toronto, London, Sydney and Hong Kong.

In the US, I expand on my prayer thusly: 'This independent research was conducted through an online survey in December 2006 and January 2007 by Erdos & Morgan. Institutional samples were provided by Thomson Financial and Ipreo, retail samples by Barron's Online and BetterInvesting.'

In other regions, with more concentrated investment communities, Mary Maude Research does the survey by phone. In Canada, for example, 250 analysts and portfolio managers were interviewed at length for our 2007 awards. For each region, we publish an Investor Perception Study, which fully explains the methodology and the results. Mary Maude always explains especially clearly how votes are added up.

Over the last couple of years I've taken to describing our global research effort, which can encompass upwards of 5,000 survey respondents a year, as 'the world's largest investor perception study.' I've said that phrase approximately a gazillion times. And until someone contradicts me, I'll keep saying it.

Okay, I hope that's clear now. But some – and I mean you, Dominic – might still dispute whether these analysts and investors are actually qualified to judge the quality of IR. How informed are they? We do our best here, too. Our US survey, for example, begins with general questions about their views on disclosure, governance, non-financial valuation measures and the use of technology for IR. We think these questions focus respondents on some key points of IR and make them better judges. Then, for the awards questions, we remind them to ignore stock performance, and we often suggest a few criteria. For best IR web site, for instance, we ask them to consider things like the depth of information and ease of navigation.

There, that's my rant, and thanks, Dominic, for giving me a chance to vent. It's a race, really, isn't it? You and me, trying to stay a step ahead of that bunch – that army! – of ignoramuses (thanks again for that word) who don't understand alternative trading systems – or the methodology behind the IR Magazine Awards.

Neil Stewart
Executive editor, IR magazine