Soft Intelligence and Social Media

Cyber security and cyber threats abound, information security policies are now owned at the highest levels of a company from the C-suite to the board, according to EY’s 2013 Global Information Security Survey “Under Cyber Attack.” While companies seek to protect intellectual property and disruption caused by hackers, one area, as it relates to intelligence gathering by investors, deserves further attention: the oversharing of personal information on social networks.

Today, social media use by institutional investors stands at approximately 52%, according to a NIRI survey earlier this summer. What I am noticing more and more in my daily conversations with investors is that social media seems to be emerging as a tool to get an edge on impending news, particularly as it relates to the broadcasting of new LinkedIn connections.

While tracking Facebook “likes” on emerging brands as a proxy for potential revenue growth or monitoring hiring trends or personnel departures from company LinkedIn pages to gauge near term expenses might seem an obvious use of social media to impact investment decisions, what might not seem so important is the innocuous LinkedIn request.

Following a roadshow or investor conference, management might receive a request to “connect” from an institutional investor. If the request is accepted, consider what that might mean going forward if new connections are then broadcast to that investor; it may very well tip your hand on impending news.

A quick fix would be to turn off LinkedIn activity broadcasts by visiting the privacy settings of your account. Longer term, it’s wise to consider a companywide policy.

Matt Sheldon, msheldon@pondel.com