Newcrest turns focus on analysts
Despite his terms of reference guiding him to focus on Newcrest's internal processes, Dr Newman launched a long and withering account of the analyst and broking community, and advised Newcrest to consider abandoning its proactive relationship with analysts in favour of a reactive approach. Analysts are typically employed by big investment banks to provide impartial analysis of companies, and the publication of four analyst notes in the days before Newcrest's June 7 corporate restructure has been at the heart of claims that Newcrest selectively briefed certain individuals before the rest of the market.
But in Newcrest's case, Dr Newman said analysts were slow to adjust to the gold price slump in April, and he blamed some of that malaise on a recent trend for cost-cutting across the industry.
"Due to cost cutting, analysts have to cover more companies and so have to spread their time more thinly," he said. "Despite the fact that the investor relations function [inside Newcrest] understands well its obligations under the law, it seems some market analysts fail to fully understand the relevance of the information that the company releases ... this can lead to misunderstandings, a sense that others have privileged access."
Australian Investor Relations Association chief executive Ian Matheson said Dr Newman's report contained some valuable insights into how the industry had evolved. AIRA would consider Dr Newman's recommendations as it continued updating its "best practice guidelines" for the industry.
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Dr Maurice Newman's review of Newcrest Mining highlighted concerns about the analyst and broking community, describing analysts as short-staffed, inexperienced and slow to grasp market changes. Although tasked with reviewing Newcrest's internal processes, he also criticised industry-wide practices and suggested Newcrest rethink its engagement with analysts.
Dr Maurice Newman is a former ASX boss whose review of Newcrest Mining drew attention because it scrutinised how the analyst community and investor relations interact. For everyday investors, his findings spotlight potential information flow and market‑communication issues that can affect share-price interpretation.
The report noted that four analyst notes were published in the days before Newcrest's June 7 restructure, which fuelled claims that some individuals may have been briefed before the wider market. Dr Newman suggested misunderstandings about the relevance of company releases can create a perception that some people have privileged access.
Dr Newman linked parts of the analyst community's slow responses—for example to an April gold price slump—to industry cost‑cutting. He said analysts are often required to cover more companies and therefore spread their time thinly, which can reduce the depth and timeliness of their analysis.
One recommendation in the review was that Newcrest consider moving from a proactive relationship with analysts to a more reactive approach, in light of concerns about how analyst coverage and market perceptions were operating.
AIRA chief executive Ian Matheson said the report contained valuable insights into how the industry has evolved. AIRA plans to consider Dr Newman's recommendations as it continues updating its 'best practice guidelines' for the investor relations industry.
The review suggests investors should be aware that analyst coverage can be stretched and sometimes slow to react to market moves. That can lead to misunderstandings or perceptions of uneven access to information. Everyday investors may want to check official company disclosures and investor relations communications when making decisions.
The article notes that analysts are typically employed by large investment banks to provide impartial analysis, but Dr Newman's review raises concerns that cost pressures and heavier workloads can reduce the speed and depth of that analysis. Investors should treat analyst notes as one input among company releases and other sources of information.
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