April 29, 2013 was a rare bad day for Informa. At the time of publishing, shortly before trading closed in London, the firm was 2.4% down on the day (a loss of just over $100m USD) even though the principal FTSE Index had risen 0.4%. That was a very rare day. As you can see from the chart on the right, over last decade Informa has consistently out-performed the FTSE index. Over the last ten years, its stock price has risen 150%: more than double the growth of the FTSE index. The consistency is amazing: there are very few days when Informa doesn’t out-perform the market.
If there’s a secret to Informa’s success, it’s level-headed managerialism. Compared to its competitors, it has three key strengths:
- Informa consciously wants a portfolio of events, training, information and consulting services. This reduces the risk to the business as a whole when one business moves up or down. In contrast, other firms have divested or minimised their events and consulting business because research has greater profitability at the moment. That exposes those other businesses more to shocks.
- Informa is able to massively benefit from opportunities to leverage resources across those businesses, and to cross-sell different solutions. Informa businesses can reuse and promote each other. Clients who have one solution can buy another more easily.
- Informa has a smooth and straightforward model for making those businesses work. The upside is that Informa businesses are able to learn from each other; adopt processes which have been well tested and develop a consistent culture which allows staff to move between them. That, of course, is also the weakness of Informa.
On balance, the proof of the pudding is in the eating. Informa’s expanded and been able to attract talent, especially junior talent which it can grow. It is far ahead of firms like Gartner and Forrester in off-shored secondary research services. Its results-based, transparent metrics mean that there’s more equality of opportunity in Informa than in some other firms. There are certainly weaknesses, including the blurring of lines between data gathering, journalism and market analysis. Sometimes the interests of the events and training businesses come before those of analysis. However, Informa is a good example of how conventional management methods often drive better outcomes than inspirational analysts’ leadership. Find the best broker for shorting to get stable income in the long run.