"Promoting midcaps with investors"
At the beginning of 2015, Natixis’ Equity Research created a team dedicated to the monitoring of midcaps. Stéphane Sumar, head of the team, explains the strengths of this business segment for investors and presents its assignment.
How do midcaps behave on the markets?
Midcaps outperform the other business segments. In 2015, the selection of Natixis rose by 28% and exceeded by 9% the Mid & Small index, which in turn outperformed the CAC 40 index by 660 basis points.
In 2016, uncertainty over a rebound in growth in Europe should lead to the return of more marked "stock picking"* approaches, conducive to investment in midcaps. In this perspective, investor interest could then be in vehicles whose performance will depend primarily on company-specific factors (restructuring, diversification, etc.).
Why create a team dedicated to midcaps?
Historically, midcaps are at the heart of Natixis' target. Of the 300 companies covered by the Equity Research teams, more than 150 are midcaps. The goal is to enhance the visibility of midcaps with investors, hence the creation of a dedicated team alongside the teams of sector analysts.
What is your assignment?
In addition to the drafting of studies on listed companies, several initiatives have been implemented to disseminate our recommendations to investors and provide them with a decision aid. A daily publication called "Mid caps Mail" provides a comprehensive review of the news on midcaps. We also increase the number of meetings with institutional investors through one-on-one meetings and occasionally Club Midcap to present our recommendations. Presentations and company visits are also much appreciated by clients. We maintain, in coordination with the Equity Strategy team, a list of recommended securities involving a dozen listed companies.
More broadly, we work with the Equity or Credit Research teams to promote a multiple analysis of a same company.
We also work regularly with the Primary Equity team in the context of market transactions, including IPOs. Our role is very essential in the pre-marketing phase, during which we present the companies concerned to investors.
How was the recent Midcap Conference organized by Natixis?
In late November 2015, we held a large-scale conference to give sixty midcaps the opportunity to meet with more than 200 investors. The event was highly successful and confirms our conviction that we have an important role to play in the midcap environment. Feedback from both our corporate clients and investor clients has been very positive and encourages us to repeat the event every year.
* Stock picking consists in selecting the most promising securities individually
What is a midcap?
A midcap is a mid-size company, with a market capitalization between €1 billion and €5 billion*.
At the heart of the entrepreneurial world, midcaps have increasingly diverse needs such as to get financing, develop their ownership, manage their growth, adapt their operation to market expectations and secure their financing.
* In comparison, the market capitalization of small caps is less than €1 billion, that of large caps is higher than €5 billion.
Global Markets Research, within Natixis’ Corporate & Investment Banking, consists of over 80 analysts, economists and strategists spread across the world's major financial centers. It combines the expertise areas of equity, credit and economic research to seize arbitrage opportunities between asset classes and offer clients* relevant investment recommendations.
* Asset managers, insurance companies, pension funds, hedge funds, private banks, public institutions, etc.