It’s 10 p.m. Do you know where your IR program is?

Investor Relations

Investor Relations (source)

I’m not really asking where your IR program is in the geographic sense of the word.  I’m asking where your IR program is in terms of effectiveness.  Every once in a while, it’s good to take a step back and evaluate whether your strategies and tactics are still productive.
 
A recent webcast, based on a survey conducted by Thomson Reuters, demonstrated that in today’s world of “risk aversion, macro dominance, reduced focus on active equity and equity fund outflows,” getting your story heard can be very challenging.  An article in CFO Magazine echoed the sentiment that “the rockiness of the equity markets and the prevalence of high-frequency trading and exchange-traded funds make cultivating the investor base tougher than ever.”
 
Are you doing the right things to be appropriately noticed by the investment community?  Respondents from the Thomson Reuters survey noted that knowledge of the business and ability to answer questions, responsiveness and timelines, and financial guidance are among the most important facets of a good investor relations program.  Interestingly, however, a separate survey conducted by the National Investor Relations Institute showed that the number of companies providing financial guidance has steadily declined over the last several years, with 76 percent of companies providing financial guidance in 2012, compared with 81 percent in 2010 and 85 percent in 2009.
 
While there will never be full agreement between the investment community and listed companies on providing guidance, and while every investor relations program is unique, there are a few things that all IROs should consider:
 

  • Build trust with the investment community through consistency, transparency and willingness to engage.
  • Take an individualized, targeted and precise approach to identifying appropriate investors.  Spend time with these prospective investors through one-on-one meetings, at conferences or by hosting site visits and investor days.  Stress quality over quantity.
  • Ensure your messages help the investment community understand your growth path and its trajectory.
  • Use business and financial press as an additional communications vehicle.  Include video in press releases and on your IR website to generate better engagement by making your story come to life.
  • Be aware of what’s being said about your company via social media, and strategically use social media to deliver your messages.
  • While any worthwhile activity generally requires time and patience, the long-term result should be enhanced shareholder value.

 

Laurie Berman, lberman@pondel.com
 
 

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