Boards - What do capital markets think of them? The unfiltered perspective of a credit analyst

In an era marked by rapid change, technological disruption, geopolitical uncertainty, and economic volatility, understanding how analysts perceive boards is more important than ever. We turned to an analyst who operates independently of major financial institutions for a truly candid perspective.

In this episode of the Better Boards Podcast Series, Dr Sabine Dembkowski, Founder and Managing Partner of Better Boards, speaks with Anke Richter, a seasoned credit analyst and strategist with nearly 30 years of experience in the bond markets. Based in London, Anke has held positions at JP Morgan, Deutsche Bank, and Moody’s, and brings a unique vantage point shaped by her work on both the buy-side and sell-side, as well as in a rating agency. She holds both the CFA Charter and CIMA accountancy qualification.

A Two-Step Approach to Company Analysis

According to Anke, the fundamentals of analysing a company haven’t changed:
 “What you do when analysing a company is always the same.”

Step one involves scrutinising the company’s fundamentals—numbers, valuations, and performance indicators. Step two involves examining red flags in leadership or governance. Common issues include overly dominant founders in small firms or boards where everyone shares the same surname, particularly in family-run conglomerates in emerging markets.

Anke notes that although she doesn’t always request formal board evaluations, she views them as a missed opportunity for many firms. Proper board assessments and clear investor communication allow companies to spotlight their governance strengths and strategic priorities.

Bridging the Knowledge Gap Between Boards and Investors

Anke frequently observes significant knowledge gaps in how boards interact with capital markets. “We always find that people are sometimes not aware of how certain things are done or how things are perceived.”

Lack of familiarity with investor expectations can seriously handicap a company’s position. To mitigate this, Anke advocates for including individuals with capital markets expertise on the board. This experience ensures the board understands key market dynamics and investor sentiment.

Fixing Investor Relations: Easier Than You Think

Investor relations, Anke believes, is an area where companies can quickly improve.
 “This is something you can, as a company, very easily fix.”

Improvements don’t require massive budgets. What’s often lacking is not money but human resources and awareness. Clear communication, a well-maintained website, an accessible IR team, and informative roadshows are foundational but frequently overlooked.

Anke also points out two critical missteps:

1. Inconsistent messaging between equity and debt stakeholders—this discrepancy doesn’t go unnoticed.

2. Combative attitudes from executives during investor meetings can irreparably harm trust.

Beyond the Numbers: The Human Element

Anke acknowledges that while financial metrics are clear-cut, evaluating leadership is far more nuanced. “If I have an opportunity, I always want to meet management, but one also has to be realistic about whether you can assess whether they are good at running the company.”

Good marketing c

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Transcript

SPEAKER_00: 0:02

What do analysts think of boards? An unfiltered perspective of an independent. Welcome to the Better Boards podcast series. the podcast for chairs, CEOs, non-executive directors, company secretaries, and their advisors. Every episode is filled with practical insights and learnings from those inside boardrooms. We discuss what really matters and highlight actionable steps you can take to enhance the performance of your board. Well, how do boards deal with capital markets and the investor community? What are the pitfalls? What do analysts really think? How do they go about their work. How do they look at boards? We cover it in this episode. I'm delighted to talk with Anke Richter. Anke has been working as a credit analyst and strategist in the bond market based in London for almost 30 years. She started her career at JP Morgan, worked for a number of institutions, including Deutsche Bank and Moody's. And now she reflects on her career, is in a different position, can dare to be a bit more independent. And that is what we are interested in. Anke, thank you so, so much for contributing to the Better Boards podcast series. Thank you very much for having invited me. Anke, you were invited because of your career span. You have been with leading financial organizations. You have been with Moody's. And it's a time to reflect on your career a bit. I classify you as an independent because you have seen the capital markets from various sides. So I thought you're perfect. for having a conversation about what are you looking for in boards and executive committees when interviewing them and analyzing a company?

SPEAKER_01: 1:50

Yeah, thank you. Good question. I mean, I work on the buy side, the sell side, rating agencies, but essentially what you do when you analyze a company is always the same. There's two steps. On one hand, you look at it from a fundamental point of view, try to assess the company, And then you look at the valuations. And when you look at the fundamentals, obviously you look at numbers, but you try also to assess management teams, sports, et cetera. One thing we look for when we look at management and boards is actually the red flags. When I look at a board, what is a red flag? I think the classical example would be if everybody has the same last name, where you say, okay, there is a corporate governance issue. When we look at emerging markets, often we have family-owned conglomerates, or when you look at smaller companies, you can have often a very dominant shareholder, which is often the founder. So my focus is, when I look at this side, often for the red flags. When I look at management, obviously one of the biggest things we look for is the track record. Has that management or the CEO, the new CEOs coming in, have they done this before?

SPEAKER_00: 3:03

Of course, given what we do, I'm particularly interested to hear your perspective on board evaluations. They do become increasingly important. Do you ask if a board evaluation was conducted? Usually, I

SPEAKER_01: 3:17

don't. I mean, as I said before, I look for red flags. And if I don't see any obvious red flags, I kind of focus on other things like profitability, balance sheets, etc. I think it's also a little bit up to companies maybe to guide the investor community more towards this. I think a good example is when we look, for example, at environmental data. Ten years ago, hardly anybody talked about their CO2 footprint. Nowadays, you open up an investor presentation, most companies talk about it and their goals. And I think when we look at board evaluation, I think it's also up to companies to basically show what work they're doing there, showing that they have a self-awareness, they reflect, and also trying to be best in class. So I would not expect a company maybe talk half an hour about it, but I think to put more focus on it, it's up partially also now to companies to show the good work they're doing in that area.

SPEAKER_00: 4:22

Thank you. What advice do you really have for boards when it comes to dealing with the investment I know when we prepped for this recording you said that you were a little bit surprised how little they know about how capital markets work really.

SPEAKER_01: 4:41

Yeah, I think that's something sometimes I'm surprised. You know, I've been working in this field for 30 years. It's not rocket science. There's a certain way how things are done. And when you work in an area for a very long time, you assume that everybody knows how it works. But I think what we always find that people are you know, sometimes not really aware how certain things are done or how things are perceived. I think when you look at the investor community, if I say one thing to boards is perception is reality. I mean, you can come up with great strategies, execution, et cetera, but ultimately, is it recognized by the investors? Is it really, do people see this? So I think one thing I would advise boards is when you look at your board composition and you try to find a good mix of skills to have somebody who actually has capital market experience. I mean, that's assuming you're a big listed company, et cetera. Because I think as much as you can read about things also, certain things are very hard to pick up very quickly. Not because it's complicated, it's a bit experience. So I would say it helps to have somebody who's familiar with how the capital market works to have somebody on board. Obviously, people can look at the share price. I mean, that's often considered a barrel as a temperature. how the market thinks about a company. But I think it's a little bit more complex. So I think boards need to also look at how is the investor relations strategy executed. And is the message actually reaching its audience?

SPEAKER_00: 6:28

I mean, I find this interesting. You know, some weeks ago, I was at the Capital Markets Conference in Zurich. And What you are saying is absolutely aligned with what I heard at the conference, where people are really surprised that boards do not have more capital market expertise, lack the knowledge, lack the awareness very often. Well,

SPEAKER_01: 6:53

it's very interesting. I mean, obviously, I was on the debt side. I'm on the debt side, not on the equity side. But there's a very recent example of a super, super big company Actually, it's a German company, very large German company, which is undergoing a little bit of difficult times. They brought in a new CEO. The CEO is doing a lot of restructuring. And the company basically has way too much debt. But in its industrial presentation, the new CEO just talked about equity and to the equity community. And the company has more debt than the market capitalization of that company. And the forefront of the issue of this company is basically debt reduction. However, the CEO, And he was before at a company which has no issues about that. So he probably never met a debt investor in its entire life. But he basically talked only about equity to the equity community. And this is a super large company, you know, kind of you would think they would know better. And we're talking about the CEO. And these are blunders, mistakes you see at super high levels still. So in that respect, I think not having somebody on board of a board who is in tune with capital markets is not necessarily a good idea.

SPEAKER_00: 8:22

Interesting. Our listeners are always interested in practical insights. Do you have a kind of a list or is there a list in your community of the do's and don'ts for companies when it comes to investor relations that boards should be aware of?

SPEAKER_01: 8:38

Yeah, I think the do's, I think it's often very simple. I mean, help investors to understand the company and have the information available. So that means they have a clear message, a good website, an investor relation team, which is actually available where you not have to call 10 times and nobody is available or ever get back to you, have presentation roadshows, which actually have information, which is useful. This sounds very basic, but you will see when you look even big listed companies, and we're talking some of the largest companies in the world, there's still quite a big gap what people do. So I think this is something which you can very, as a company, very easily fix. I mean, of course, it takes a bit of time. I mean, you need to look at what is best practice, how you implement this. It's a project. It doesn't cost a lot of money. It's more human resources you have to put on it. And once you set it up, you're done. So I think this is something where I'm still sometimes surprised how people are not having optimized that while it's super simple in my way. And that comes in where you say, okay, you should have people around who have the experience from the capital market side and who can say, okay, this is best practice. This is useful. This is not useful. I think on the not do behavior. I have two things through my career which I think are relevant. The first one is don't have a different message for the equity side and for the debt side. I think you still see that. You used to see it more often. We still see it sometimes these days where the message is to the equity community, yes, we want growth, M&A, increase the dividend, share by max, and then they meet debt investors or a rating agency and where the whole thing is toned down. Yeah, we're cautious and leverage and, you know, the message is different. Obviously, the idea that these two communities don't talk to each other or there's no flow of information is wrong. So the first People really need to have one message which works for both communities. And the second one, which when I think back, my experiences with management teams is competitive behavior. I think there are a couple of meetings throughout my career, either on the investor side or the sales side, or when I was at a rating agency, where you met some super aggressive management teams. And usually nothing is achieved by that. When you see management teams like that you say okay how do they deal with their employees how do they deal with their clients and the ultimate question is do you trust them with your money because as an investor whether you're on the debt side or on the equity side you give them your your money and if people kind of come across like they want to hit you over the head do you want to give them your money You know, it's not like there's only one company. There are other companies and it's a competition. So I don't think that's usually a very good idea. I mean, it's not that long ago. I was at an industry conference. There were debt investors, equity investors. The industry was a bit in trouble. The company, the specific company particularly. So the investor said, OK, so what's next? What do you plan on doing. And, you know, obviously at one point it was a board member. He was a bit unnerved by the questioning and said to the audience, well, why don't you come up with some ideas and tell us what to do? That's obviously not the way to go about it. And if you are the company, everybody talks at lunch over how horrific the meeting was, that you better wouldn't have had the meeting. I think that's also one of the big takeaways. I mean, this was a board member. I'm sure that person has many qualifications. Dealing with investors is not one of them. And I think there must be also the recognition that some people are not particularly good at these sort of things don't have the temperament for it they either need to get training or you're just They do something else. But the damage you can do with these sort of meetings is real. And, you know, as I said, there are some management teams. I mean, I remember another one when I was at Moody's where literally you had to be in a zen state before you walked into the meeting because it was coming to a war zone and they were personally insulting you. I mean, this is rare. But it's really about marketing. You have to look at it through marketing. And that means the messaging must be right, but also who does it, the personalities to go about this.

SPEAKER_00: 13:42

So what do you find the hardest when you have to evaluate a board or management teams?

SPEAKER_01: 13:48

Well, I think the hard it is, it's very subjective. I mean, when I look at balance sheet, you know, I can calculate the leverage and then I can take a view whether that's good or bad or good profitability or bad. But I think when we meet management teams, although I always like to do it, I find it interesting, I'm very much aware that my impressions might be completely wrong. And I think there are some very good examples. I think the most famous one where people thought the management was fabulous and people are still telling you what an amazing presentations they had was Enron. I mean, we all know how Enron ended up. They were super in presenting and they were terrible in the end of delivering. I have an exact opposite. I covered a company, it's 20 years ago, government-owned companies, so there was no equity. They made a huge acquisition, needed to take on a lot of debt, and management was already before not exactly helpful. So there was this meeting where people said, okay, so where's leverage going to be? How are you going to deleverage? And the CFO said, well, you're an analyst. Why don't you figure it out yourself? So that was not very good, but in the end of the day, they were very good at managing that acquisition. So they came across terrible, People were very doubtful whether this would work out. They did a very good job. So what I'm saying is, you know, I want to see management, but I'm also very humble from the experience that you can get it wrong. And it's very hard to put your finger on whether a management, you know, when you meet somebody, whether they're good at it or not. I mean, look at George Clooney. He played a doctor on TV in Chicago, an ER doctor. He did fabulous. We all know he's not a doctor. So you will find people who come across really amazing, but they just can't run a company amazingly. So I think it's something which I want to do. If I have an opportunity, I always want to meet management. But one has to be also realistic about whether you can really... assess whether they're good at running the company.

SPEAKER_00: 16:05

I think our listeners will keep particularly this example in mind. So sadly, we have to come to an end of our conversation. And we always have the main question at the end. What are the three key takeaways? What should listeners should take away from this conversation?

SPEAKER_01: 16:22

Well, I think when you look at boards and capital markets, I think the sort of three takeaways I would think about is, first of all, have somebody on your board with capital market experience. I think if you look at your board, you want to have different skill sets. That, I think, is the skill set which is important. Obviously, often it's also people who have experience in finance, accounting, financial markets. Secondly, I would say, have a unified message for equity in debt investors, and also something which is in sync with the company goals. I mean, it needs to be consistent. You can't say, okay, we tell that community this and the other one, something slightly different. And I think the last one is perception is reality. You need to basically understand be in touch, whether what you're planning in the board, what your vision is, how you want to position the company, where it should be. Is this really also seen by investors? And that's not always a given. Just because you plan it, it doesn't mean that the investor community sees you like that. And then you have to look into your toolbox, the investor relation function, how you convey the messages. And if If it doesn't work, how you can change it? I mean, that is an area which I think you shouldn't take as a given that the message is received at the investor community. I think that's the sort of three things I would say to people. And, you know, if you don't know a lot about capital markets, that's okay. But go and look for somebody who has the knowledge and get advice.

SPEAKER_00: 18:05

Fantastic. Anke, thank you so, so much for contributing to the Better Boards podcast series.

SPEAKER_01: 18:10

It was a pleasure. Thank you very much, Salina.

SPEAKER_00: 18:13

This episode is part of the Better Boards podcast series brought to you by Better Boards. We are a provider of board evaluation solutions and are currently in the process of building a really strong and exciting community. If you would like to become part of that community, if you are an organization or if you are a professional service firm offering board evaluation services, get in touch. If you would like to hear more of our work or would like to see a demo, also get in touch. And we always welcome comments about our podcast and pick up Thank you so much for listening. You can reach us at info at better-boards.com.