Roadshow guide to Denver

Denver may have registered remarkable population growth in recent years, but during 2017 and 2018 it saw a little less love from IROs. 

Over those years, the Mile-High City fell out of IR Magazine’s ranking of the top 20 most-visited roadshow destinations, which is based on an annual survey of hundreds of IR professionals. 

But this year Denver is back. In our Global Roadshow Report 2019, the city is 19th in the list of most-visited cities globally, with 15 percent of respondents saying they had traveled to the location for a non-deal roadshow over the previous 12 months.

The population surge in Denver – the number of residents has increased by roughly 20 percent since 2010 – is bringing buy-side talent with it. Some investment firms are allowing analysts to relocate to the city and work remotely, according to Mary Turnbull, managing director of corporate access at Raymond James & Associates. 

‘Given Denver is such a popular place, it’s bigger than the actual shops that are based there,’ she says. ‘If you’re going on your own as an IRO and you’re trying to figure this out, you wouldn’t necessarily know that. But the salespeople at a broker are going to know, for example, that ‘Joe and Sam’ have this small energy pod.’

Like Baltimore, which we covered in a roadshow guide last week, Denver is a top-heavy roadshow destination, with Janus Capital Management dominating in terms of equity assets under management. The firm looks after around $185 bn, according to data from IHS Markit.  

The next biggest Denver firms for equity assets under management are Colorado Public Employee Retirement Association (Colorado PERA) with $22 bn, ETF provider ALPS Advisors with $12 bn and ArrowMark Colorado Holdings with $10 bn.

While not based in Denver, OppenheimerFunds has an office in the greater metropolitan area and has traditionally seen a high number of meetings from visiting companies – but that may be changing. 

‘OppenheimerFunds had the fifth-highest number of meetings in the Denver area, but several of the analysts located there who had a history of meeting with clients left the company following the Invesco acquisition,’ says Christopher Stroh, director of situational analytics, research and analysis at IHS Markit.

Worth the day trip

When companies come to Denver, it’s often for a full day, adds Stroh. ‘They are typically hitting the staple investors and, depending on their schedule or fit with other investors’ portfolios, they may meet with a few other investors in the area,’ he says. 

‘We generally spend a day in Denver, but it’s a very jam-packed, value-added day,’ says Nick Johnson, senior investor relations manager at The Coca-Cola Company. 

‘Janus is the cornerstone of the Denver trip. That said, we do take advantage of being in Denver because there are a lot of other quality long-only institutions that are worth our time. So we tend to fly in, do two or three one-on-ones, a group lunch and then move on to somewhere like Kansas City.’

Turnbull says longer stopovers are becoming more common among IR teams. ‘What some companies have done in the past is spend a half-day in Kansas City and a half-day in Denver. But I think there are more and more investors in Denver and it’s more of a full day now,’ she says.

Growth focus

Denver has a long history as a center for growth investors – Janus founder Tom Bailey built his firm on bold stock picking – and that remains true today. In total, around three quarters of the city’s equity assets are invested under a growth or aggressive growth strategy, according to data from IHS Markit. 

But value-focused investors, such as Colorado PERA and Cambiar Investors, shouldn’t be discounted: together, they account for 13 percent of equity holdings in the city.

Thanks to the city’s bottom-up investors, buy-side meetings tend to be ‘value-added’ for both parties, says Johnson. ‘The conversations in Denver are very long-term-focused, strategic and industry-driven, which is definitely where we like to focus the conversation. They are not short term in nature or just on the next quarter,’ he says.

Looking at the most popular sectors, the city’s investors have 26 percent of equity assets in technology, 16 percent in healthcare and 13 percent in consumer services, reports IHS Markit. 

‘In terms of sector rotation, over the last year Denver-based firms have been selling down financials, consumer goods, technology and industrials, while slightly increasing exposure to healthcare, consumer services and utilities,’ says Stroh. 

Denver is also a sweet spot for small and mid-cap companies, notes Turnbull. ‘Sometimes the smaller names tend to have a hard time, but Denver is a really good place for them,’ she says.

On a geographical basis, Denver has the vast majority of its equity assets invested in North America (88.5 percent). Europe receives 8 percent of equity investment, while Asia gets just 2.5 percent. 

For IROs used to trawling around London or New York, Denver is compact and easy to navigate. Just watch out for the traffic jams that snarl up the roads in and out of town at rush hour – a common complaint from locals who say the city’s infrastructure has not kept pace with its rapid population growth.

‘Denver’s very easy to get around,’ says Johnson. ‘Matter of fact, we have the ability to probably walk to at least two of the meetings in the downtown financial area. So it’s very convenient.’ 

Food-wise, there are plenty of great options in Denver, with Stroh saying ‘you absolutely need to stop by Snooze for brunch.’ Arguably, however, the location is better known for its drinks: the state of Colorado is highly regarded among craft-beer fans and plays host to more than 400 breweries.

‘It’s a fun city to spend the evening in, with great restaurants and some good breweries,’ says Johnson. ‘We just really enjoy our time in Denver.’

Top five investment firms in Denver by equity assets under management (EAUM)

Source: IHS Markit; data as of September 30, 2019