11x Returns, but He Was Already in the Elevator

The Meeting

Fifteen minutes into a one-on-one meeting, a young hedge fund investor slammed his notebook shut and delivered an emphatic assessment of our credibility: “Total f--ing liars! Typical f--ing Indonesian corporate! Meeting’s over!!”

And he stormed out of the room.

His junior colleague looked across the table, somewhat sheepishly shrugged his shoulders, and followed.

The meeting was over.

What made this interesting, rather than just unpleasant, was the trigger. He erupted at the exact moment our explanation of a novel financial instrument finally broke through.

The investor had been carrying an incorrect understanding of the financial structure (which was not unique to him, it must be said). We had never met him before. We had never spoken to him. This was our first and only opportunity to provide clarity where he had previously held a misunderstanding.

And when he understood — when the explanation actually landed — he concluded we were lying.

The clarity itself was the provocation.

I have thought about that meeting, on and off, for more than twenty-five years. It was not a pleasant fifteen minutes, but that’s not why it stayed with me. I keep coming back to it because it taught me three things about investor relations, each in a different way.

What He Already Believed

Why do good answers fail in investor meetings?

I didn’t fully appreciate it at the time, but that meeting taught me something I’ve relied on in every investor interaction since: it doesn’t matter how good your answers are if the investor has already decided what your story means.

You can have the right data, the right meeting, the right explanation, and still lose. Not because the information was wrong. The investor had decided what your story meant before you opened your mouth. At that point, new information doesn’t correct the narrative. It gets absorbed into it. A good answer reinforces a good framework, and it reinforces a bad one just as readily. It just gets reinterpreted.

This is the part of investor relations that doesn’t appear in any job description but determines most of the outcomes: pre-positioning. Everything that happens before the meeting matters more than the meeting itself. The equity story, the analyst consensus, the market’s baseline understanding of your business. These form the framework through which every subsequent data point gets interpreted. Get the framework right and new information reinforces your narrative. Get it wrong and even a perfect explanation confirms whatever the investor already believes.

Which is, to put it mildly, not ideal when you’re the one sitting across the table.

Our investor had walked in with a framework that treated Indonesian corporate management as unreliable by default. We had no relationship, no prior context, no track record with him. The framework was all he had, and it filtered everything we said. When our explanation of the instrument finally made sense, his framework reinterpreted the new clarity as further evidence of deception, rather than as the correction it actually was.

If someone had told me in 1998 that the single most valuable thing I would learn about IR was that information only works when the receiving framework is ready for it, I would have nodded politely and gone back to preparing the next meeting. It took years of sitting across from investors with strong priors, watching the same dynamics play out in less dramatic form, before the real weight of that lesson landed.

The Bias Tax

“Typical f--ing Indonesian corporate.”

That was the phrase. Not “I don’t understand this instrument.” Not “walk me through that again.” The country of origin was the diagnosis. The new information was just evidence.

I have thought about that phrase for a long time, because the mechanism behind it didn’t retire with that particular meeting. Twenty-seven years later, Indonesian companies still pay a version of this tax in every international investor interaction. The discount isn’t always this theatrical, but the structure is the same: a set of priors about emerging market governance that filter everything the company says through a lens of scepticism that developed market issuers rarely encounter.

The numbers bear this out. Depending on the study and the market, the governance-driven discount for emerging market companies runs somewhere between 13% and north of 50% relative to what the same business would command on a developed-market exchange. Some of that is justified; disclosure standards, minority shareholder protections, and regulatory frameworks genuinely vary across markets. But a meaningful portion of it is just bias dressed up as prudence.

This is a cost that gets paid on both sides of the table, and I think that’s the part that doesn’t get discussed enough.

The companies pay it in the form of a valuation discount. Every quarter that the market doesn’t understand the business is a quarter the discount compounds. For a company raising capital, the emerging markets tax shows up directly in the pricing: lower multiples, wider spreads, more conservative indicative ranges, and a roadshow calendar populated with investors who are, at best, sceptical and, at worst, hostile.

But the investors pay it too. A set of priors so firmly established that new information gets rejected rather than processed is not a risk management strategy. It is an information processing failure. And information processing failures have a cost, even if the investor never calculates it.

A set of priors so firmly established that new information gets rejected rather than processed is not a risk management strategy. It is an information processing failure.

The companies that break through the bias aren’t necessarily running better businesses than their peers. They’re running better communication. They invest in disclosure architecture that doesn’t require the investor to extend trust on faith; it provides the evidence that makes trust unnecessary.

When we rebuilt the disclosure framework for one emerging market company, the market re-rated P/E and EV/EBITDA multiples, eliminating a 35% discount that had persisted for years and increasing market capitalisation by US$650 million. The information had always been there. The architecture to communicate it had not.

The Meetings You Can’t Win

Every IR professional has a meeting that taught them more in failure than a dozen successes ever did. The Four Seasons episode was mine.

But the lesson I keep coming back to, the one that took the longest to crystallise, has less to do with disclosure frameworks or emerging market bias than with the meetings themselves, and what the ones you can’t win teach you about the ones you can.

The meetings you can win are the ones where the investor’s framework is close enough to reality that your answers reinforce it. The meetings you can’t win are the ones where the framework is so far from reality that your answers, no matter how good, get processed as noise, or, worse, as confirmation of whatever the investor already suspected.

The skill of IR isn’t performing well in the room. It’s knowing, before the first question lands, which kind of meeting you’re in. And when you recognise you’re in one you can’t win, the real skill is managing the exit: keeping the conversation professional, protecting your CEO or CFO from a confrontation that will rattle them for the next three meetings, and preserving the possibility that this investor’s framework might shift six months from now when the numbers have done the talking.

That last part matters more than most IR teams realise. The investor who walks out angry is gone. The investor who leaves unconvinced but not insulted is someone you can re-engage when the evidence accumulates. The difference between those two outcomes is usually determined in the final two minutes of a meeting that was lost in the first five.

Our CFO that day didn’t have that skill yet. Neither did I. We sat through the explosion, absorbed it, and carried the fallout into the next meeting. With experience, I learned to recognise the situation early, close gracefully, and redirect my energy to the meetings where the framework was still forming.

The Arithmetic

Both men eventually moved on from that hedge fund.

The vociferous one returned to his predestined place within his family-run fund in New York, and led a successful career by any measure.

The subdued junior colleague, the one who shrugged and followed him out, went on to found his own firm — specialising in emerging and frontier markets across Asia. He built it to several billion dollars in assets under management. The man who kept his composure while others lost control went on to spend the next twenty-five years investing in exactly the kinds of companies his colleague had walked out on.

The “Indonesian corporate” delivered an 11x return over the following two years.

You could read this as a story about a rude investor. I read it as a story about what bias costs the person holding it. The emerging markets discount isn’t only paid by the companies that trade below fair value. It’s also paid by the investors whose priors are so firmly set that they walk out of the room before the opportunity registers.

Eleven times your money in two years. And the man who could have owned it was already in the elevator.

There is, I suppose, a fourth lesson in this story, which is about temperament. One man reacted to confusion with rage and went home to the family business. The other shrugged, kept listening, and went on to build his career on the conviction that emerging markets were worth understanding. I have a theory about which approach compounds better over a thirty-year career, but I suspect you do too.

What Would Have Changed the Outcome

How should IR teams prepare for investor meetings?

I have run this scenario through my head enough times to know exactly what would have made a difference, and it is not what most people guess.

Better answers in the room would not have helped. We had the right answers. The answers were the problem, or rather the absence of a framework that could receive them was.

We had, in fact, done a good deal of the pre-positioning work. The equity story had been developed. Sellside analysts had been briefed extensively on the financial structure and its implications.

But the analyst community itself had bifurcated: some understood the instrument clearly and recognised the specific value it delivered; others had settled on an interpretation that no amount of spreadsheets, meetings, or supplementary disclosure could shift. The market’s framework wasn’t absent; it was fractured, and the fracture ran right through the middle of our investor audience.

What we lacked was intelligence on the man sitting across the table. We had no read on his portfolio, his mandate, his prior exposure to Indonesian investments, or the assumptions he was carrying into the room. We didn’t know which side of the analyst divide had shaped his view, or whether he’d formed his view independently of the sellside entirely.

In 1998, that wasn’t a failure of preparation. It was how it worked. There was no investor CRM, no ownership database piped to your laptop, no way to pull up an investor’s holdings, mandate constraints, or career history before you sat down. You walked into rooms and discovered what people thought about you in real time. Everyone did. The information asymmetry ran both ways, and the tools to resolve it did not yet exist.

Today, that excuse is gone. Shareholder intelligence is now a mature, competitive market. Irwin, AlphaSense, LSEG, Bloomberg, FactSet, S&P Capital IQ, Nasdaq IR Intelligence, and Orient Capital all offer some combination of ownership data, investor targeting, portfolio analysis, and market context. S&P Capital IQ provides probably the most comprehensive single-platform offering. The point isn’t which platform you choose. It’s that the information exists, and there is no longer any reason to walk into a meeting without a detailed read on who you’re facing and what their likely priors are.

The discipline of pre-positioning hasn’t changed since 1998. The ability to execute it has transformed completely, and the question for any IR team today is simply whether they use it.

The meeting at the Four Seasons cost us fifteen minutes and some dignity. It may have cost the investor one of the best-performing positions of his early career.

Both of those costs were avoidable — not by better answers in the room, but by better architecture around it.

That is what investor relations is for. Not the meetings. Not the slides. Not the Q&A deck. The framework.

Jonathan Zax is the founder of IR Advantage, a specialist investor relations advisory firm working with listed companies across Asia. If your IR team is preparing for a roadshow, an investor day, or a capital markets transaction, we should talk.