A Question for ChatGPT: Is AI Transforming Financial Communications and Threatening Jobs?

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The post below was written completely by AI (without any edits from yours truly). I prompted ChatGPT to write a blog about how AI can be used by investor relations professionals for competitive analysis, investor targeting, website content creation and more. I also asked it to discuss whether AI is taking away jobs, which is a question I hear often from industry colleagues.

So, without further ado, here’s what AI had to say. It’s actually pretty good, much to my surprise.

In the ever-evolving landscape of finance, technology continues to redefine traditional practices. One such area undergoing a significant transformation is investor relations (IR), where artificial intelligence (AI) is playing an increasingly vital role. From competitive analysis to targeting investors and crafting compelling content for IR websites, AI is revolutionizing how companies engage with stakeholders. However, amidst this advancement, the question arises: Will AI make investor relations professionals obsolete?

Competitive Analysis:

In the fiercely competitive world of finance, staying ahead of the curve is paramount. AI-powered tools offer unparalleled capabilities in analyzing vast amounts of data, enabling companies to gain deep insights into market trends, competitor performance, and investor sentiment. Natural language processing (NLP) algorithms can sift through news articles, social media chatter, and financial reports to provide real-time updates on industry developments, allowing IR professionals to make data-driven decisions swiftly.

Targeting Investors:

Identifying and attracting the right investors is a crucial aspect of investor relations. AI facilitates precision targeting by leveraging predictive analytics to identify potential investors who align with a company’s values, goals, and risk profile. By analyzing past investment patterns and market behavior, AI algorithms can predict investor preferences and tailor communication strategies accordingly. This targeted approach not only increases investor engagement but also enhances the efficiency of capital allocation.

Content Creation:

Crafting compelling content for investor relations websites and communication materials requires a deep understanding of financial data and regulatory requirements. AI-powered writing assistants equipped with natural language generation (NLG) capabilities can generate insightful reports, press releases, and shareholder communications autonomously. These AI-driven platforms can analyze complex financial data, interpret regulatory guidelines, and produce coherent narratives in a fraction of the time it would take a human writer.

The Future of Investor Relations Professionals:

While AI undoubtedly streamlines many aspects of investor relations, it’s unlikely to render human professionals obsolete. Instead, AI serves as a powerful tool to augment their capabilities, allowing them to focus on high-level strategic initiatives. Investor relations professionals bring invaluable expertise in building relationships, interpreting nuanced market dynamics, and providing personalized guidance to investors.

Moreover, the human touch remains indispensable in navigating complex ethical and regulatory challenges, especially in an era where transparency and accountability are paramount. While AI can crunch numbers and generate reports, it’s the human judgment and empathy that foster trust and credibility in investor communications.

In conclusion, the integration of AI in investor relations represents a significant paradigm shift in financial communication. By harnessing the power of AI, companies can gain a competitive edge in understanding market trends, targeting investors effectively, and crafting compelling narratives. However, rather than displacing investor relations professionals, AI complements their skills, enabling them to adapt and thrive in an increasingly digitized landscape. The future of investor relations lies in the synergy between human expertise and technological innovation, where AI empowers professionals to unlock new levels of efficiency and effectiveness.

Back to me, Laurie, a real person. The AI writing was solid, the messages were cogent, and we concur with the conclusions. Humans still bring invaluable expertise in interpreting data generated by AI, providing counsel to management teams and boards, and building meaningful, long-lasting relationships. So no worries.

Laurie Berman, lberman@pondel.com

Small Company Stocks will Outperform the Market in 2024, Survey Finds

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LOS ANGELES, April 17, 2024 — Seventy-five percent of investors say small public company stocks will outperform most major stock indexes in 2024, according to results of the 2024 Small Public Company Investor Sentiment Survey, conducted on behalf of SNN Incorporated, a multimedia financial news and publishing company, and PondelWilkinson, Inc., an investor relations and strategic public relations firm.

Of the investors surveyed, 74% say they are investing in companies valued between $50 and $300 million market capitalization, while 26% are buying stocks across all sizes.

“Three-quarters of those surveyed expect small public company stocks to outperform most major stock indexes in 2024, with about half expecting this stock category to outperform bigger companies this year,” said Robert Kraft, CEO of SNN Network, parent company of the Planet MicroCap Showcase being held in Las Vegas April 30 – May 2.

“While a dichotomy currently exists between those who are bullish on small public companies and those who are less so, as indicated by higher gains achieved thus far into 2024 in larger-cap indexes, investors surveyed view small company stocks as sought-after investments in 2024 and said they are sticking with their investment strategies,” Kraft added.

Other key survey findings include:

  • Gains: More than half of investors (52%) expect to increase their small company portfolio in 2024, after one quarter of responders (27%) reported gains of 20% or more from this segment in 2023.
  • Sector outlook: Technology (27%), natural resources and energy (19%), and healthcare and biotech (10%) represent the sectors investors are most bullish about for 2024. These industry favorites remain unchanged from prior surveys.
  • Risk tolerance: Ninety-one percent of investors have a “moderate- to high-risk” tolerance when investing in small public companies, 51% and 40%, respectively.
  • Buy or sell: Eighty-nine percent of investors say their general time horizon for holding small public company stocks is typically long- (more than 6 months) to very long-term (buy-and-hold), 50% and 39%, respectively.
  • Investment benchmarks: Seventy-six percent of survey respondents say they also are buying small public company stocks listed outside the U.S. Additionally, survey respondents cited management teams (38%) as the most important criteria for investing, followed by profitability (37%) and stock price (17%).

“As more investors become interested in small company stocks, it is critical that management teams communicate transparently, effectively and consistently,” said Roger Pondel, CEO of PondelWilkinson. “Where companies communicate their value propositions beyond traditional channels also is important, especially since the survey revealed a wide range of media that investors use to identify investing ideas, including social media platforms and increasingly, select participation at investor conferences and quality sponsored research.”

About the 2024 Small Public Company Investor Survey
The online survey was conducted in December 2023 to gauge investor sentiment as it pertains to small public companies valued at $300 million market capitalization and under. Seventy-seven percent of survey respondents categorize themselves as individual investors, followed by institutional investors (11%), family offices (8%) and wealth managers (4%). Four in 10 respondents (42%) have 20+ years of investing experience, followed by 10+ years (28%), 6-10 years (17%) and 1-5 years (13%).

About SNN Incorporated
SNN Incorporated is a global multimedia and publishing financial news investor portal covering the small-, micro- and nano-cap markets by providing news, insights, education tools and expert commentary. Visit https://www.youtube.com/@PlanetMicroCap to subscribe to Planet MicroCap’s YouTube Channel to receive notifications of new CEO interviews, as well as the latest episodes of the Planet MicroCap podcast.

About the Planet MicroCap Showcase
Hosted by SNN Inc., the Planet MicroCap Showcase is an annual 3-day event for the microcap investing community, comprised of company presentations, 1×1 meetings and educational panels. Click here for more information or follow Twitter X and YouTube for important updates.

About PondelWilkinson
Founded in 1968, PondelWilkinson Inc. is a national investor relations and strategic public relations consultancy. The firm represents a wide range of publicly traded, pre-public and privately owned companies, from startups to large caps, and develops programs targeting both Wall Street and Main Street. For more information, visit www.pondel.com. Follow PondelWilkinson on X at @PondelWilkinson or LinkedIn.

Celebrating Achievement with Grace

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CNBC.com, on February 17, published a growth story about the best performing stock in the past 30 years. It wasn’t Apple, Tesla, Google or any of those mega tech companies that might at first come to mind.

The best performing stock for the past three decades, according to CNBC and others, happens to be one of our longtime client companies that we proudly have represented for all those years.

Those who know us recognize that we, as with this client, are humble, hard-working, and not into self-promotion or bragging. After all, we haven’t even written the company’s name in this blog yet.

Nevertheless, in a world where accomplishments are celebrated and recognition is sought after, the concept of bragging rights sometimes is warranted. In this case, it’s more about our client and acknowledging achievement … a nod to success without crossing the line into boastful hyperbole.

Over the years, we adapted to our client’s ascent, strategically advising the company as it grew from a microcap issuer with a U.S. retail investor base, to a global, large-cap giant, attracting prestigious institutions and many sell-side analysts. Tactically today, we are still issuing their press releases, hosting investor days, serving as point-of-contact for the investment community and news media, and advising on messaging for M&A and a host of sensitive, sometimes complex corporate matters.

Admittedly, we are bragging that our organization has been part of some of our client’s success on Wall Street. But we are boasting with the intention of embracing this opportunity to uplift and inspire. The well-deserved success our client has achieved reflects talented leadership and unwavering dedication to innovation and quality, while always keeping egos in check and having a sense of gratitude.

We are proud to embrace bragging rights like a badge of honor—not as a tool for self-aggrandizement, but as a symbol of hard-earned success, as we congratulate Monster Beverage Corp., along with our colleagues behind the scenes at PondelWilkinson. 

Roger Pondel, rpondel@pondel.com

Judy Lin, jlin@pondel.com

Is the IPO Market Heating Up? 5 Tips Before Going Public

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It’s been quite some time since we’ve seen a robust IPO market. According to Stock Analysis, the best year for IPOs in the last two decades was 2021, with 1,035 new issues. That’s more than twice the next best year (2020) when there were 480. Thus far in 2023, there have been less than 150.

Although the IPO market has cooled considerably, those companies that have braved the public markets over the last few years appear to be doing well, at least according to the only ETF focused exclusively on the IPO market. The Renaissance IPO Index (ticker: IPO), which tracks more than 60 IPOs in their first three years of trading, is up 28.4% year-to-date, outpacing the S&P 500, which is up about 17% this year.

Anecdotally, we’ve been hearing from bankers, lawyers, accountants and other service providers, that the IPO market is poised to heat up in the first half of 2024, and as a result, they are gearing up for a strong (or at least stronger) year ahead. The number of new issues may not reach 2021 levels, but consensus is that we should see more activity than in 2023.

At the same time, there have been several planned IPOs in 2023 that did not make it to market, and general sentiment seems to be that we shouldn’t expect a major spark for the remainder of this year. CNBC recently reported that poor performance for stocks in October and higher-for-longer interest rates are among the reasons many IPO candidates are rethinking or delaying their debuts. As told by Reuters, the CEO of French Automaker, Renault, said that it will not go forward with an IPO for the company’s electric vehicle unit if the valuation is too low. His exact quote was, “We are not crazy.”

While it’s nearly impossible to accurately predict where the IPO market, and the capital markets in general are headed, it’s always a good idea to make sure your company is prepared for when the time is right. If you are a company looking to go public, here are some high-level suggestions to ponder:

  • Ensure that you have a good story to tell. For the most part, growing revenues and profitability will attract investor interest, but you’ll need to put together strong talking points that show what you’ve accomplished thus far, and why those accomplishments will serve you well going forward.
  • Interview several investment banks before you decide on which one, or ones, will represent you in an IPO. Do they have strong institutional coverage, or is their focus on retail investors? Is there an analyst who covers your sector that can pick up coverage of your stock once your deal is complete?
  • Now may not be the right time for your company to test the market. Investment banks have been around for a very, very long time, and most have a fairly good track record on valuing companies. If a bank tells you they don’t think they can get a deal done at the valuation you’re seeking, take stock and mull all options.
  • Make sure you have a strong management team that is knowledgeable and prepared to work around the clock to get a deal done. Multiple SEC filings will have to be made, conversations with attorneys will be plentiful, and roadshows, whether virtual or in-person, will take time, preparation and grit.
  • Surround yourself with experts. In addition to bankers and attorneys, you may want to consider hiring an IR firm, who can help navigate what is a complex process, both during the IPO and after you are publicly traded. Do you have a solid presentation so that your story will resonate with potential investors? Have you gone through presentation and media training? Do you understand Reg FD and the rules and regulations of being a public company?

Going public can be extremely rewarding. It can provide access to capital to help grow your company. It can introduce you to tons of interesting and smart people. It can provide a platform to tell a growing number of people about why your company can make a difference. But, it is not a decision to be entered into lightly, so make sure you examine any consideration that may come up, so that you’re more than ready for the bright lights of public company stardom.

Laurie Berman, lberman@poondel.com and Chris Casacchia, ccasacchia@pondel.com

Maximizing Investor Relations Outreach with SEO: Guidelines to Navigate the Digital Landscape

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As publicly traded companies strive to expand their outreach and attract potential investors – particularly retail investors – a comprehensive and strategic approach to online presence through SEO (search engine optimization) is increasingly becoming part of the communications mix.

By its simplest definition, SEO is the process of enhancing visibility on search engine results pages for a website or brand through organic (non-paid) means. By optimizing various SEO elements, such as content, keywords, meta tags and backlinks, businesses can improve their online rankings, making it easier for investors and other stakeholders to find relevant information about the company.

An essential aspect of SEO is keyword research. Identifying the right keywords – which are words or phrases frequently searched for by potential investors – allows companies to tailor their content to match those specific queries. By aligning content with relevant keywords, businesses can create informative and investor-focused materials that cater directly to their target audiences.

Institutional and retail investors are more likely today to turn to the Internet first for research before making investment decisions. A robust SEO strategy ensures that a company’s information is readily available and easily accessible to potential investors.

By providing accurate and up-to-date content, and, of course, keeping Reg FD in mind, companies can effectively communicate their financial performance, growth strategies and vision. Moreover, a user-friendly website with well-organized information can foster a positive impression of the company, thus increasing the likelihood of investors exploring further.

A robust, prominent online presence is not only about providing information to existing stockholders but also about attracting new ones. When potential investors search for companies within their investment interests, SEO-optimized websites have a better chance of appearing higher in search results. For example, appearing on the first page of search results establishes credibility, authority and attention, increasing the likelihood of potential investors viewing the company as a reputable investment opportunity.

SEO Techniques

High-quality and informative content is the backbone of any successful SEO strategy. In the context of investor relations, content must be tailored to address the needs and interests of investors. This starts with crafting engaging annual report letters, professionally written press releases and blogs that highlight the company’s achievements and prospects. With the help of an SEO specialist, by integrating relevant keywords strategically into this content, search engines will recognize value and rank it higher in search results.

With the reliance investors place on mobile devices, companies must ensure that their websites are mobile-friendly. A website that is easily navigable on various devices enhances the user experience and attracts broader audiences. Search engines also prioritize mobile-friendly websites, which can positively impact a company’s SEO rankings.

Backlinks, also known as inbound links, are links from other websites that lead back to a company’s website. Search engines perceive backlinks as votes of confidence and authority. When reputable and relevant websites link to a company’s website, it signals to search engines that the content is valuable and reliable. As a result, the website is likely to receive a higher rank in search results, leading to increased visibility among potential investors.

Measuring Success

To gauge the effectiveness of an SEO strategy, companies should monitor relevant key performance indicators. These may include organic website traffic, keyword rankings, bounce rates and conversion rates. By analyzing these metrics, businesses can identify what aspects of their SEO efforts are working well and which areas require improvement.

Garnering attention from prospective investors, be they individuals or institutions, is never easy. A well-executed SEO strategy represents one more tactic to improves a company’s search engine rankings by strengthening its communication channels, which, in turn, lead to more prosperous and sustainable relationships and results.

Diego Lievanos, Digital Content Strategist

Contact investor@pondel.com for more information on deploying SEO for investor relations.

5 Common Misperceptions About Investor Relations

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The age of myths, misperceptions and even dis-information is upon us, often pumped through the echo chambers of news media, social platforms and podcasts. The investor relations sector is not immune, with reality and perception not always being aligned. To help clarify any confusion, below are five common misperceptions.  

  1. Performance alone will impact stock price. Performance is just one of several factors that affect valuation. While a company’s financials are critical on Wall Street, that narrative must be conveyed professionally to investors and analysts, we well as to the business press. Gaining the right attention does not happen by itself and is another critical building block in attracting and retaining investor interest and ultimately enhancing valuation.
  2. The primary goal of a public company is to serve its customers. While serving the customer well usually leads to great financial performance, management teams and their boards should never lose sight of their primary mission, namely, serving the shareholders through enhancing value. Under federal law, corporate directors have a fiduciary duty to make decisions in the “best interests” of the shareholders, not customers, and to supervise management teams to make sure that happens.
  3. Share price is the only measure of true success. While share price is certainly an important metric – and perhaps the most important in shareholders’ minds – there are other factors that contribute to a company’s overall success, including revenue growth and profitability. Additionally, a company may have a strong underlying business but experience short-term fluctuations in share price due to external factors beyond its control.
  4. ESG is really not that important. While investors seek shareholder value principally through a company’s financial performance, environmental/social/governance (ESG) initiatives are becoming increasingly important to investors. According to PwC’s Asset and Wealth Management Revolution 2022 report, fund managers are expected to increase their ownership in ESG-focused companies to $33.9 trillion globally by the end of 2026, up from $18.4 trillion in 2021. Ownership of ESG-focused companies is on pace to represent 21.5% of total assets under management globally in less than five years.
  5. Investor relations is only about talking to investors and enhancing valuation. While investor relations is not listed in the Merriam-Webster dictionary, a simple Web search will reveal myriad definitions, far too many to list here. In reality, investor relations goes way beyond communicating with investors and enhancing valuation. Conveying a company’s mission and objectives, adhering to full disclosure, communicating transparently to multiple audiences and fostering sound media relations are just a few of the many areas that support a comprehensive, professionally managed IR program.

Chris Casacchia, ccasacchia@pondelwilkinson.com

Investor Relations in a Bear Market

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Every great story deserves an engaged audience.

It’s a philosophy we deeply believe in at PondelWilkinson – So much so it’s splashed across our website banner and written on the back of our business cards.

And it rings true regardless of market conditions, even in bear markets, when the value of equities or other investments dip 20 percent or more from recent highs.

That happened around mid-June on the S&P 500, and while there’s little companies specifically can do to calm market forces, taking a proactive, non-promotional stance is the best course, according to PondelWilkinson CEO Roger Pondel.

“Retreating or staying purposely quiet is not a strategy that works,” he asserts. “Astute investors have their antennae up now, looking for good companies.”

In a bear market, investors go into safer stocks, explains PondelWilkinson Vice President Judy Lin Sfetcu, who adds some historical context to highlight her point.

During the dark months of the financial crisis of 2007 and 2008, when the S&P sank nearly 52%, investors flocked to companies with solid financials and established track records, abandoning companies teetering on insolvency.

“If a company has a good balance sheet, they should be messaging that to investors and Wall Street,” Sfetcu says.

Managing Director Laurie Berman views this bear market more as a reflection of investor sentiment, than company specifics, and a recent tally by FactSet provides some data points to back that up.

Through July 22, 2022, 68 percent of S&P companies in Q2 reported a positive EPS surprise, while 65 percent of S&P companies reported a positive revenue surprise.

Granted it was a small sample size (21 percent of total company results), but undoubtedly good quarterly metrics by several publicly traded companies.

Yet, as of press time, the S&P was down just over 13 percent for the year. The tech-heavy Nasdaq, down 21 percent this year, closed with the worst six month start on record, losing nearly 30 percent of its value through June, according to Yahoo Finance.

“If a company is being negatively impacted by macro issues, that company should be honest about what that means for its future, and importantly, what steps are being taken to try to insulate it, or use the macro issues to their advantage,” Berman suggests. “Highlighting certain areas that may give investors more confidence can be helpful.”

Analysts and other finance experts contend bear markets typically last between nine months and a year, so settle in for some continued volatility, especially as inflation, pandemic-led labor shortages, related supply chain constraints, and rising interest rates present ongoing challenges.

In the interim, here are a few more dos and don’ts to ponder:

  • Think responsiveness and transparency.
  • Message the company’s strengths: cash flow and balance sheet; client/customer relationships; resilience and history in prior down markets.
  • Message if and how current economic conditions are creating change for the company, positive or negative, including decision-making.
  • Be certain that investors hear regularly from c-suite executives, sometimes more than the CEO and CFO, on conference calls, non-deal roadshows (NDRs) and conference presentations.
  • Court and know key investors and their concerns, not just about your company, but about their portfolios.
  • Give investors reasons to hold your shares, or buy more.
  • Don’t feel defensive about a falling stock price, particularly if the company is still performing well. Investors know the reason.

“Resist the temptation to over-promise about the future,” says Pondel. “Be proactive about reaching out to new investors and participating in NDRs and conferences. They are not a waste of time, even in a bear market.”

Consider this blog entry a primer to a larger discussion on investor sentiment, a key topic we’re aiming to further develop into a whitepaper this fall, with insightful take-aways to help public companies improve communication and messaging during volatile times.

Chris Casacchia, ccasacchia@pondel.com

How PR Can Support Micro Cap and Small Cap Companies

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