INVESTOR TARGETING DECEMBER 2015
RECENT BUY-SIDE TRENDS IN EUROPE Continued growth in low cost ETFs; ETF AUM has surpassed $3tn in • the first half of 2015 Vangu guard d attracted $30bn in inflows in Q3 (Lipper) and ranks as • top buyer across Nasdaq’s EMEA clients (+$5.2bn). Also one of top buyers across German clients. Mellon Capital Management among top buyers in Europe and in • Germany Har arris As Associat ates es L. L.P. and Amu mundi di As Asset et Man Manag agem emen ent rank as • largest active buyers across Nasdaq’s European clients (+$2.1bn and +$1.8bn); both rank as top buyers across our German clients YTD No Norther ern Cross an and Cap apital al Res esear earch are among top sellers across • our German clients YTD. Both investors experienced fund redemptions in Q3 ’15 2
SWF TRENDS INCREASING GLOBAL EQUITY EXPOSURE China / $547 B Kuala Lumpur / $148 B Korea / $84 B Norges No es remains the largest holder across Nasdaq’s German clients • Hong Kong-based SAF AFE E Inve vestme ment Compa mpany still buying Europe • (+$829M in Q3) and is the second largest buyer across Nasdaq’s German clients YTD SWFs increasing global equity exposure - e.g Korea ea Inve vestme ment • Cor orpor oration on and Emplo mployees Provi vide dent Fu Fund. d. Abu Abu Dhabi abi Inves estmen ent Aut uthor ority y appointed new U.S. head of investments SWF SWFs withdraw from external asset managers to manage more in-house • 3
OTHER TRENDS WE ARE WATCHING INVESTOR ACTIVISM Acti tivists ts increasingly targeting European companies include Cev evian an • Capital, Kni night ht Vi Vinke, , Elliott and Tria Trian 63% % of North American and European IROs report senior management • is “not very concerned” about being targeted by activists (Source: Rivel Research) Tech, Financials, Basic Materials, Energy and Industrials amongst the • most targeted sectors in Europe In Eu Europe, e, 45 45 ac activist cam ampai aigns lau aunched ed YT YTD, compared with 44 • in 2014 (Source: Activist Insight). 305 305 a activi vist c campa mpaign gns la launched d YTD D in t n the he U U.S.—set to be the highest on record Activists increasingly pa partnering g with la large ge mu mutual l fu funds ds, like • Franklin Templeton and the Capital Group for support 4
INVESTMENT TRENDS IN GERMAN COMPANIES International investors make up 86.3% of the free float shares across • German companies On average, Europe ex-Germany and US investors continue to have a • strong presence across German Equities • There was a slight decline in US-based investment since March ’15, although this could be temporary Some major investors experienced fund outflows YTD and have shown selling momentum across our German client base Macro view on Europe and Germany. Recently, strategists at Goldman Sachs have estimated that US flows into Europe have slowed since the surge in buying in the spring/early summer and US investors are roughly neutrally positioned in terms of European ownership. Average % Free Float by Geography for Nasdaq’s German clients Dec 14 Jun 14 Jun 15 Mar 15 Dec 14 Sep 15 Dec 13 35% Mar 15 Dec 13 Jun 15 Sep 15 Jun 14 30% Mar 15 Sep 15 Dec 13 25% Dec 14 Jun 15 Jun 14 Jun 14 Dec 13 Jun 15 Sep 15 20% Dec 14 Mar 15 Jun 14 Jun 15 Sep 15 Dec 14 Mar 15 15% Dec 13 10% 5% 0% United States United Kingdom Germany Rest of Europe Rest of World * Based on Aggregated Shareholder Analysis YTD across Nasdaq’s German clients 5
GERMAN COMPANIES 25% US 72% 97% OF IR BUDGET ALLOCATED TO ROADSHOWS/ INVESTOR MEETINGS US East Coast US West Coast Roadshows Roadshows Down from 29% in 2014 Up from 96% in 2014 Down from 75% in 2014 66% 32% 51% ASIA > 50 one-on-one >50 CEO/CFO Group Asia CEO/CFO meetings Discussions Roadshows Down from 75% in 2014 Down from 35% in 2014 Up from 48% in 2014 81% > 50 IR hosted one-on-one meetings Down from 86% in 2014 * Source: Extel WeConvene Survey 2015 6
MARKET SIZE – HOW DO YOU TARGET? $32 8,500 TRILLION FIRMS that make up the institutional universe 30,000 TOTAL EQUITY ASSETS held by global investment managers 22% 59% MUTUAL FUNDS we follow around the globe ACTIVE ASSETS held ACTIVE ASSETS held 141,000 by Euro institutions by U.S. institutions $24.8 TRILLION BUYSIDE CONTACTS tracked in our contact management ACTIVE ASSETS managed globally system 7 Market Size
BUILDING A BALANCED TARGETING PLAN
ASSETS HIGHLY CONCENTRATED Concentrated at the top – the top 100 funds account for half the • actively managed assets of the largest 1,000 funds Opportunity within the 100-500 tranche – targeting these funds opens • up an anoth ther er 30% o % of as assets ets. “ . “Hal alo ef effec ect” t” p par arti ticular arly f for smal all-mi mid cap c p compa panie nies Top 1,000 Active Institutions in Descending Order by EAuM • 9 TARGETING INTERNATIONAL INVESTORS
NORTH AMERICAN METROS BY TIER Note: EAuM based on active funds, excluding index and broker-dealers. 10 TARGETING INTERNATIONAL INVESTORS
HOW TO IDENTIFY KEY INVESTORS/PROSPECTS? Invested in direct sector peers Attracted to company’s fundamentals – sector agnostic Runs a global sector/regional fund with significant PP Bullish trends – sector, geographical, regional, peers, fund inflows Tier 2 pool of asse ssets, ‘Halo’ effe ffect and d Sma mall ll Cap p ta targeti ting Uncover decision makers 11
LARGE PLAYERS IN SECONDARY MARKETS Large asset managers outside the main investment centers Solid anchors to a Tier 2 roadshow Sometimes an underweighted broker priority based on commission flow and not necessarily invested in your peers Equity Investment Turnover Institution Location Assets ($B) Style (%) Barrow Hanley Dallas, TX $50 Income Value 13% PNC Wealth Mgmt Philadelphia, PA $43 Core Growth 11% Marsico Capital Management Denver, CO $22 Core Growth 73% Chicago, Nuveen Asset Management IL/Minneapolis $13 Core Value 50% Favourable valuation and above market shareholder yield 12 TARGETING INTERNATIONAL INVESTORS
TARGET FRAMEWORK A target framework should cover bo both th key ey holder ers to to m mai aintai tain an and q qual alified ed target f tar et funds. Unde nderstand y nd your current nt sha hareho holde ders a and nd cons nside ider b both h Risks an and O Opportu tuniti ties es. . Prospec ects ts al aligned ed with th c curren ent t an and futu ture e str trateg ategy Holders to Ma inta in T a rg ets to Develop R ec ommended Ac c ess De sc ri pti o n # F i rm s De sc ri pti o n # F i rm s De sc ri pti o n R a nk 1x1 meetings Highest impact and fit targets and Core shareholders exhibiting risk 16 38 Warrant 1:1 management access e.g. top 50 holders holders with significant upside Overinvest time and resources 1x1 or Small Group meetings Medium to large holders with High quality firms with medium G roup or IR to proactively communicate 10 69 moderate risk or upside compatibility/impact with and warrant management access e.g. 51-100 where appropriate Small or transient holders with Small or Large Group meetings Good firms with low compatibility and moderate to no upside 6 95 Pipeline builders, itinerary fillers, resource impact for market intelligence e.g. fast-money in top 100 Top holder that is index/quant/passive Do not meet - Passive, Index, Quant, IR-immune T OT AL : 32 202 T OT AL 234 13 TARGETING INTERNATIONAL INVESTORS
CONSISTENT MEASUREMENT OUT COME Ja n 20XX - Ma r 20XX Outcome measures the extent to which targeted investors bought or sold our stock versus our peers. YT D SHARE CHANGE me t no t me t (in millio ns) Net YTD ∆ Rank Shares Sold Shares Bought -4 -11 +7 +7 -3 +10 +1 -0 +1 Track acking C ng Conv nver ersion AL L +4 -14 +18 T OP BUYE RS ME T T OP SE L L E RS NOT ME T (in millio ns share s) (in millio ns share s) YTD ∆ YTD ∆ Peer ∆ ($M) Name Rank Name Rank Barrow, Hanley, Mewhinney & Strauss, LLC 6.8 BlackRock Investment Management, LLC -0.7 -3.6 Goldman Sachs Asset Management (US) 6.0 TIAA-CREF -0.5 -34.5 Mitsubishi UFJ Trust and Banking Corporation 0.7 ING Investment Management (Netherlands) -0.3 -60.6 Adage Capital Management, L.P. 0.6 Principal Global Investors (Equity) 0.0 -4.6 Robeco Institutional Asset Management B.V. 0.5 BlackRock Investment Management (UK) Ltd. 0.5 UBS Global Asset Management (Switzerland) 0.2 Sumitomo Mitsui Trust Bank, Limited 0.0 14 TARGETING INTERNATIONAL INVESTORS
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