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What exactly do fund managers look for when investing in quoted companies? The recent RSM and Quoted Companies Alliance survey of small and mid-cap investors offers some insight.
There is increased interest in the quality of communication and reporting by small and mid-cap quoted companies – particularly companies that need to increase liquidity in their shares. That was a key finding from an RSM and Quoted Companies Alliance (QCA) survey of key investors (Small and Mid-Cap Investors Survey 2016).
RSM and the QCA commissioned YouGov to conduct in-depth interviews with 16 small and mid-cap fund managers. The survey was conducted before the EU referendum last month. Diane Gwilliam, RSM’s head of capital markets, says: “Post-Brexit may bring new aspects of performance into sharper focus. Investors will be more interested in non-UK/non-sterling revenues and their vulnerability going forward.”
While the survey revealed that the quality of reporting by companies had improved, that was weighted towards the larger companies in the survey, and the quality of reporting tailed off in smaller quoted businesses.
“In a world where investment research is becoming less and less available (and will most likely get worse as a result of the forthcoming MiFID II European regulation), company websites are becoming increasingly important,” says Gwilliam. “Websites are often the first port of call for investors as they start to gauge a company’s performance and access their annual report."
For the the survey, small to mid-cap ranges from £20m to £1.5bn in enterprise value. So what are the main points to consider?
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