Corbin Perception, a leading investor research and investor relations (IR) advisory firm, released today its quarterly research report Inside The Buy-side®, which captures changes and trends in institutional investor sentiment heading into the earnings season. The survey, based on responses from 70 institutional investors whose firms manage $1.7 trillion in total assets, remained open from December 5 - 29, 2014.
Despite another solid performance by U.S. equities in 2014, investor sentiment softened late in the fourth quarter. Notably, the percentage of those surveyed describing themselves as either “bullish” or “cautiously optimistic” declined sharply from the previous quarter. Meanwhile, participants holding a neutral to bearish outlook surged, driven largely by Asia/Pacific investors; nearly 60% of this group describe their sentiment as “neutral to bearish” while 53% expect 4Q14 earnings results to be worse than consensus. Continuing, the number of respondents indicating executive tone is “more negative” more than doubled while those who assert that management is “bullish” declined by two-thirds from last quarter. Finally, investors maintaining that current market valuations are sustainable fell to 70% from 78% last quarter. “The slowing growth we are seeing globally does not justify P/E ratios, which are stretched,” commented Lindsay Skardoon, Portfolio Manager at Spectrum Asset Management Limited.
The majority of respondents, or 69%, anticipate the Fed’s first rate hike to arrive in the second or third quarter of 2015 while more than half, or 56%, predict a short-term correction with medium- to long-term positive benefits given implied economic strength. Finally, nearly two-thirds of survey respondents, across all regions, suggest that the combination of global growth concerns, lower oil prices and the strong U.S. dollar may affect how aggressive the Fed will be in both the timing and magnitude of its near-term rate hikes.
“The subdued management outlook is not surprising, especially from those representing companies with non-U.S. exposure. The uptick in bearish sentiment is notable, as it implies increased concern as to whether future earnings growth can support today’s lofty valuations.” commented Rebecca Corbin, Founder and Managing Partner of Corbin Perception.
Finally, investors reaffirmed their preference for business reinvestment as the leading use of excess free cash flow. Dividends remain the favored method for returning cash to shareholders, while buybacks continue to fade in popularity in light of current valuations.
Since 2006, Corbin Perception has tracked investor sentiment on a quarterly basis. Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies are available at CorbinPerception.com.
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About Corbin Perception
Corbin Perception assists public companies with systematically understanding and positively influencing critical institutional investor sentiment. We provide senior level executives and IR professionals with company-specific quantitative and qualitative feedback from investors and analysts and then draw upon our firm’s considerable expertise to guide management teams in shaping those perceptions and maximizing valuation. Our clients range from highly sophisticated mega-caps to micro-caps worldwide across diverse industries. Our quarterly investor research report, Inside The Buy-side®, which tracks changes in global institutional investor sentiment, has been covered by news affiliates worldwide and featured on CNBC’s Squawk on the Street.
To access the full report, visit our website: www.corbinperception.com/research-library
