Roadshow guide to the West Coast

California represents both an opportunity and a challenge for the IRO planning a roadshow. With a significant concentration of assets and a healthy diversity of investment styles, industry focus and market cap concentration, the Golden State is a natural stop on any public company’s calendar.

Many issuers (particularly those east of the Mississippi) only market on the West Coast annually at best, which makes an approach to a money manager that much more welcome.

But the geographic spread and diversity also make roadshow planning a complicated exercise in logistics, timing and transportation management.

Assets under management easily top $1.4 tn, making the Golden State a major global and domestic money center, rivaling cities such as Boston and New York, points out Cheryl Gedvila, vice president of global corporate access at RBC Capital Markets.

The region is home to about 60 institutions with active equity portfolios of more than $1 bn – the median account size is $3.5 bn.

The majority of assets are concentrated in San Francisco and Los Angeles, with a significant amount in San Diego as well.

Unlike its East Coast cousins, however, where dense urban pockets of institutional investors turn part of any day into a walking affair, the institutional investors in these money centers sprawl across a much broader area: the only walking you’re likely to be doing is from the parking lot to the lobby.

‘Plan for an early start to your day,’ Gedvila advises. ’Californian investors operate on New York market time. Typically, we start the first meeting at 7.00 am. An 11.00 am lunch is standard and the day usually ends around 4.00 pm. Group lunch meetings work well in San Francisco, although they are a little less popular in Los Angeles.’

Traffic and urban sprawl

Allow extra travel time, particularly in LA, as traffic and urban sprawl are factors. If you’re meeting with PRIMECAP in Pasadena, for instance, Gedvila suggests starting your day there before heading downtown.

Many large active managers have multiple offices, particularly in LA and San Francisco. Brian Matt, director of data strategy and analytics at Ipreo, warns that IROs planning a West Coast visit might experience a different concentration of large active investors than a surface read of a database might indicate.

For example, Matt points out that San Francisco is home to secondary equity research offices of such major firms as Capital Group (primary location is LA), Delaware Investments (Philadelphia), Artisan Partners  (Milwaukee) and Invesco (multiple cities). ‘There’s no way to work out the exact amount of assets that are managed from these locations,’ he cautions.

The multi-office factor can also add complexity to your planning. The biggest single institution, Capital Group, has several arms that manage money separately between LA and San Francisco.

’If there is investor interest, you may find yourself having three separate meetings,’ Gedvila points out. Capital Global, Capital World (the two mutual fund arms) and Capital Guardian (institutional portfolios) don’t share meetings, she says, but ‘your time will be well spent’ hitting all three.
 

‘It’s tough,’ observes Roger Pondel, president and CEO of LA-based IR consulting firm PondelWilkinson, describing California as one of the more challenging states for roadshows. ‘But it’s a fun challenge,’ he adds.

Northern California investors are spread from Marin County, north of the Golden Gate Bridge, through downtown San Francisco, across the bay to Oakland and on into the peninsula and Silicon Valley, Pondel explains.

Southern California presents a similar challenge with important stops in Pasadena and Santa Monica, downtown and west LA, and on to Orange County. A day trip to San Diego from LA (two hours by car) can also include stops along the way.

Pondel further notes that the old perception of West Coast money managers as ‘less formal, more laid back, no ties’ is dated now that even Boston money managers show up tieless and in khakis.

But he notes one cultural difference: with fewer companies coming through in a given week than a typical money center on the East Coast, you’ll find fewer outside visitors and a ‘less busy’ atmosphere.

Major industry conferences

Consolidation among the banks has reduced the number of West Coast conferences slightly over the past few years, according to Greg Parks, CEO of the Wall Street Calendar. Nonetheless, there are still some major industry conferences in both northern and southern California.

Mirroring the industry concentrations in the state, conferences tend to be focused on technology, healthcare, life sciences, financial services and consumer industries. With all that complexity, three things to keep in mind when planning your roadshow will keep you sane – and keep your CEO/CFO productive and happy.

First, manage the complexity, don’t ignore it. Think critical mass and travel times when laying out schedules and priorities. Don’t commit too early in your planning to a specific meeting in a remote location.

It makes little sense to spend half your day driving to meet one portfolio manager if you have to pass on three equally attractive meetings closer together.

Similarly, you’ll have to plan where to stay and find nourishment, depending on your schedule. A car and knowledgeable driver are an absolute must. New York veterans who can snag a cab in less than a minute will find the West Coast is a different animal.

Second, watch the conference calendar. The West Coast is home to some important investor gatherings. But it’s equally important to keep an eye on an East Coast conference that might pull your target money manger out of town.

And finally, even though portfolio managers on the West Coast appreciate your offer to visit them in their offices, remember that ‘you still have to have a compelling story to tell,’ says Pondel.