Financial journalists don’t seem to have twigged that share price is not the only indicator of good IR. The market moves in mysterious ways - you only have to look at companies totally bereft of any IR function but blessed with a deceptively rocketing share price for proof of this.
UK broadsheet the Daily Telegraph has accused IR magazine of redefining the benchmark for good investor relations. ‘The list of award winners from its annual awards reads like a who’s who of Britain’s most troubled companies,’ it sniped. Cryptically dubbing us the ‘bible for bean counters’, the paper mocks IR accolades handed out to subprime victims in the UK banking sector. (See http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/ccdiary127.xml)
So Barclays’ shares were down 57 percent in 12 months, but why else would investors vote for the bank to win grand prix for best overall IR if not for its fight to stay afloat in tough times? Barclays’ delicate handling of its recent share issue and the timely reduction of its consensus estimates are clear indicators of the potency of its IR division.
The Telegraph also takes a swipe at HBOS for picking up the prize for best corporate governance when it shares were down 72 percent and at HSBC for winning the best disclosure practice award when it was the first bank to own up to a subprime black hole. The paper didn’t stop to consider that being the first to own up may have led to its win.
I hate to point out the obvious, but scant few banks have escaped the subprime crisis anywhere in the world. It’s a shame some journos keep missing the point: if the awards were only about share price, we wouldn’t bother getting the consensus from analysts and investors. Good IR is only put to the test when the share price starts to stutter.