A Conversation with Jonathan Paterson
As the year draws to a close, we sat down with Jonathan Paterson (JP), founder of Harbor Access, and explored a range of topics that shed light on the evolving landscape of investor relations and his personal insights.
In your experience, what notable shifts have occurred in the behavior and expectations of investors over the last 3 years?
The biggest shift I've seen is the "what have you done for me now" attitude. Investors today are extremely short-term focused. When I managed money in the early 2000s, short-term was defined as 1-3 years. Now, the prospect of holding an investment for 3 years seems to instill terror.
Looking ahead to 2024, what potential trends in the capital markets may impact IR strategies and how should companies prepare?
Cash is king. My advice is if you can shore up your balance sheet with cash on reasonable terms, go for it. Though economic indicators are pointing towards fiscal easing, cash will still be hard to come by for small cap companies. Focus on recurring revenue, as investors will reward those companies with robust revenue streams. I am also optimistic that the IPO market will make a comeback, which should stimulate market activity. Adopt a "less is more" approach in all forms of IR communication; investors will ask for more details if they're interested.
What are your 3 takeaways on the life of Charlie Munger, who provided numerous lessons on investing, life and business?
Compromise is necessary; it's a great lesson for life and business. Pay up for quality; companies with recurring revenue trade at a premium and good investors are willing to pay for that. Finally, humility and a sense of humor are key. It's ok to not be the smartest person in the room; humility can be a difficult trait for management to master. Everyone loves a good laugh and often, it can save a difficult meeting.
What were your 3 favorite books of 2023 and why?
The Optimist: A Case for the Fly Fishing Life by David Coggins - there are easier ways to catch fish, but for some reason there is a part of the population that chooses fly fishing. I have fly fished my entire life and it has taught me valuable lessons in patience, tenacity and that sometimes life just comes down to luck.
Wind Swept & Interesting is the autobiography of Billy Connolly, one of my favorite comedians from Scotland. Billy went from the shipyards of Glasgow to an internationally acclaimed comedian. Affectionately known in Scotland as the “Big Yin,” I met him once in NYC and he was amazing to chat with. Billy was once asked “You are so famous and wealthy why do you still fly commercial?” He replied: “Because private jets are like darts and more likely to crash!"
Traffic by Ben Smith - social media is such a large part of our lives and of any IR program. This book explains the growth of social media and how the likes of The New York Times believed it had missed out on news flow, and simply bought its way into the social media world.
What are you most looking forward to in 2024?
I am looking forward to markets returning to some form of normality and investors recognizing the opportunity in small cap companies. I'm eager to get back out and meet with investors to talk about our clients. On a personal note, I have a snowboard trip planned with my son, and I've promised myself, to make time for fishing again.
