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How to Craft an Effective Perception Study
Gene Rubin
Senior Vice President
Rivel Research Group
March 4, 2010
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Rivel Research Group

Established in 1991

One core competency – marketing research

A unique specialty – investment community research

Thousands of interviews with investment professionals
every year

Clients include Global Fortune 500 companies (including
BP, McDonalds, BG, PepsiCo, AT&T, MasterCard, AXA,
Altria, Vale)
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Investor Perception Study Necessities
1. Good list – investors should be familiar with your company.
2. Questionnaire – to ensure that objectives are addressed.
3. Question order – start with broad and end with specific.
4. Structure – every respondent must be asked the same questions in the same order.
5. Qualitative feedback – thought provoking questions needed to probe for insight.
6. Quantification – results must be “counted” and cross tabulated in order to
benchmark, measure and compare.
7. Objectivity – protect against bias.
8. Anonymity – protect identity for most candid results.
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Key Elements of Effective Research
A study should be able to:
 Measure the effectiveness of communications:



Do they hear it?
Right audience?
Enough transparency?
 Analyze knowledge gaps (audience differences)
 Compare findings against peers
 Measure perceptions as they evolve
 Foster stronger relationships between the board, C-Suite
and investor relations professionals
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Poll Question #1
How well do you think your investors understand your
company’s investment proposition?
• Excellent
• Good
• Fair
• Poor
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Investment Community Universe
Buy-side
Sell-Side
Financial Media
Debt
Retail
Internal
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Fringe
Core
Subgroups
Public Company Buy-Side
Sample
Region
US
Europe
Asia
Canada
Stock
Activity
Recent Buyers
Recent Sellers
Fund
Type
Investment
Style
Ownership
Mutual Fund
Asset Management
Hedge Fund
Pension Fund
Growth
GARP
Value
Total Return
Top Owners
Secondary Owners
Underweights
Targets
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Sample Creation…The Most Important Step
Total
Core
Fringe
Total Interviews
70
50
20
Sell-Side (net)
12
10
2
Covers
Does Not Cover
10
2
10
0
0
2
Buy-Side (net)
Top Owner
Secondary Owner
Target
58
23
17
18
40
19
12
9
18
4
5
9
Met with Management
Did not Meet Management
32
26
28
12
4
14
Growth
Value
GARP
14
19
25
11
13
16
3
6
9
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
A Study Should Provide In-Depth Qualitative Feedback
What are the Strengths of ABC Company?
“They have solid assets as well as a strong market share in a high growth market. The management team is
very capable and did a great job turning the company around from the situation it was in three years ago.
They’re ahead of others in terms of new information technology and implementing process re-engineering.
They’re doing a good job in changing the way they perform routine administrative tasks in order to protect
themselves against being exploited by vendors who traditionally have had better information systems and
tend to charge too much or pay too little, whatever the case may be. ABC has done a good job of updating
their systems in order to make sure their dealings with the suppliers and payers are fair.”
PM/Owner/US/Met Management
“Operational execution is probably their biggest strength. Relative to the industry, they do a fairly good
job of managing the political exposure to which this industry is subject. The management team is viewed
very favorably relative to other companies and maybe slightly above the average firm. They’re decent, but
very good on the operational side.” PM/Owner/UK/Has Not Met Management
“Senior management is very accessible. I like the fact that I can get a hold of these guys and that they will
call me back. They do a good job of being visible to Wall Street – i.e., they present at a lot of conferences
and are also accessible at their headquarters. I appreciated being able to go down there and spend a day
with different corporate managers within the company. Furthermore, they’ve done a good job of actually
running the company.” BSA/Owner/US/Has Met Management
“They’re going from a very bad time to a better time. They are getting much more focused and back to the
strategy they had before times were difficult. Essentially, new management came in, changed the strategy
and brought on the bad times. Then, the old management came back and fixed things. Other strengths are
ABC’s size, which leads to power in many different markets, and the fact that they are concentrated in
many markets.” BSA/Former Owner/UK/Has Met Management
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
What are the strengths of ABC Company?
Buy-side
Able to mention strengths
(Base)
Total
Sellside
Total
(66)
(10)
(56)
%*
%*
%*
nonOwner owner
(34)
%*
(22)
%*
100
59
100
70
100
57
100
65
100
45
Strong R&D, drug discovery, science/develop products well/
good technology/platform continuously yields new drugs
47
70
43
53
41
Productive scientific staff for size/often first in making scientific discoveries
5
-
5
12
5
57
20
63
71
50
47
10
54
65
36
Pipeline just beginning to bear fruit/some near-term catalysts
14
10
14
15
14
Broad late stage product portfolio/strong portfolio/
impressed with products have with big partners
6
10
5
3
9
26
40
23
21
27
20
11
30
18
15
23
10
11
15
5
24
40
21
21
23
Advanced technology/R&D (net)
Strong/diverse product pipeline/portfolio (net)
Deep, strong, diversified pipeline/diversified products/
high number of compounds advancing to clinical stage
Have marketable/quality products (net)
Have products on market, approved drugs/succeeded in developing drugs
High quality/very good products
Have some high quality partnerships/ahead of curve on joint
ventures/able to use deals, partnerships to build company
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
What are the strengths of ABC Company?
Buy-side
nonOwner owner
Total
Sellside
Total
20
50
14
21
5
Good regulatory track record/ability to get drugs approved/to market
17
30
14
21
5
Experienced marketing, selling drugs/have sales force, commercial strength
11
20
9
12
5
Effective management/excellent, hard driving CEO/gets things done
5
10
4
6
-
Attractive/interesting areas of research/targeting attractive, high growth markets
18
30
16
15
18
Well-diversified company/conservative business plan/low risk business model
12
20
11
15
5
Communications strengths (net)
6
20
5
6
5
CEO markets company well/very good analyst presentations
5
10
4
3
5
Approachable management/management responsive
3
10
2
3
-
Management honest/reliable
3
-
2
3
-
Increasing sales for products/steady revenue stream/exceeded sales estimates
6
-
7
3
14
Stock less volatile than typical stock in industry
3
-
4
6
-
Management strengths (net)
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Major Themes Raised in Discussing
ABC Strengths* (Unaided)
(Total Respondents)
59%
Advanced
Technology/
R&D
42%
57%
Strong/Diverse
Product Pipeline
29%
ABC 2006
S&P 500 Norm
20%
Management
58%
6%
Communications
37%
0%
20%
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
40%
60%
80%
100%
An Effective Study Should Allow You to Compare to
Important Peers and to Yourself Over Time…
5.1
4.9
4.5
2006
2004
4.3
2002
4.8
5.0
4.6
4.2
1999
Norm
Overall Impressions of ABC
2006
2004
2002
1999
Norm
Overall Impressions of Management
(Scale: 6 - highest and 1 – lowest)
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
4.3
4.1
Expected Earnings Growth
Performance of ABC versus Peers
Better than peers
About the same
Worse than peers
Uncertain
100%
80%
39%
52%
56%
64%
70%
74%
60%
40%
39%
18%
32%
20%
26%
13%
9%
0%
2004
21%
4%
6%
2006
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
4%
19%
6%
8%
5%
5%
Did Not Meet
Management
Met
Management
Attended
Analyst Day
20%
10%
Missed
Analyst Day
ABC Ratings on Selected Aspects of IR since 2004
5.1
Quarterly
conference
calls
2006
4.4
4.6
Responsiveness
4.6
2004
4.9
Norm
4.8
Providing access
to management
4.8
4.2
4.5
4.6
Candor and
credibility
3.9
4.8
4.1
Level of
disclosure
3.8
4.3
1
2
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
3
4
5
6
Driver Analysis
Importance / performance
Describes ABC well
Will reach operating profitability (30%)
20%
77%
10%
48%
Strong technology (63%)
47%
32%
20%
Good liquidity (38%)
13%
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
10%
70%
13%
10%
2%
65%
10%
Balances R&D with profitability (43%)
7%
38%
25%
High caliber senior management (78%)
Predictable financial results (38%)
40%
60%
Good growth potential (85%)
Well developed commercial capabilities (65%)
Not descriptive of ABC
53%
Full R&D pipeline (85%)
Financially strong company (68%)
Uncertain
5%
57%
50%
11%
40%
58%
62%
22%
25%
Importance of ABC Pursuing Various
Capital Deployment Initiatives (Aided)
(Aided)
Very Important
Important
Reinvest in the business
Initiate a dividend
Make a major acquisition
Uncertain
84%
Make bolt-on acquisitions
Repurchase shares
Not as Important
28%
52%
16%
12%
8%
16%
40%
8%
24%
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
12%
8%
44%
68%
52%
12%
16%
Possible Areas for Discovery
Quantified Evaluation of Strategic Plan
Best Practices in Communications
Cash Deployment Policies
Overall Impression
Board Structure
Major Issues Facing Industry
Corporate Governance
Social Responsibility
Impression of Senior Management
Disclosure
Familiarity with Strategic Plan
Measures to Improve Investment Appeal
Corporate Strengths
Corporate Weaknesses
Peer Analysis
Expected Performance vs. Peers
Familiarity
Investor Relations Assessment
Improvements to the Investor Relations Program
Quantified Assessment of IR Characteristics
Quantified Assessment of Communication Vehicles
Assessment of Peer Strategy
Executive Compensation
Identification of Key Valuation Drivers
Viability of Strategic Initiatives
Corporate Performance on Key Drivers
Assessment of Current Valuation
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Poll Question #2
Do you plan to conduct a Perception Study over the
next 12 months?
• Yes
• No
• Under consideration
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Q&A
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.
Contact
Ivan Peill
www.adr.com
Gene Rubin
www.rivel.com
Ivan.m.peill@jpmorgan.com
212-623-0423
grubin@rivel.com
203 226-0800
©2010 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A.