Investor relation professionals also need to proactively communicate the right message to the right investor, which starts with understanding that investor’s decision-making criteria. Due to fundamental changes in the brokerage industry and sell-side, many companies, especially smaller and medium-sized businesses — are struggling to attract or maintain analyst coverage.
Investor relation professionals can no longer rely on analysts to regularly report on their business. With diminishing coverage, investor targeting has become a critical function for Investor relation professionals.
It’s key to understand how the function of corporate access plays into your meeting schedule and to push for the most strategic meetings. There is no substitute preparation and strategy when it comes to seeking and maintaining investors.
Investor relation professionals also need to proactively communicate the right message to the right investor, which starts with understanding that investor’s decision-making criteria. Investor relation professionals need to ensure they get their message out to investors and get an early read on anything that may be creeping up on them, including activist intentions.
The 2008 financial crisis was a watershed moment. The aftermath exposed many problems within the industry, including a growing disconnect between some management teams and their investors.
Companies started receiving poor scores regarding executive compensation from mutual and index funds which was followed by a wave of activist campaigns and proxy fights. Investors are changing the way they classify companies; peer groups are evolving to take rapidly changing conditions or investment strategies into consideration.
Say, for instance, a company increases its dividend from 2% to 4%. This company would then be perceived as part of a ‘synthetic basket’ of stocks made up of companies that have drastically increased their capital return programs.
Investor relation professionals need to be aware of these types of emerging investment strategies such as Socially Responsible Investing (SRI) which is becoming more meaningful to investors. Shareholders are increasingly making decisions around investments and divestments based on socially or environmentally responsible factors.
Peer group considerations and SRI represent just two of the growing types of ‘thematic’ investor characteristics (another example is passive investors) that companies need to monitor and engage with. As a result, it’s no longer effective to focus solely on factors such as assets under management or specific sectors.
Investor relation professionals need a broader view of investor characteristics and tendencies that they can’t get from traditional peer analysis. This could mean identifying ideal investors in entirely new ways. A savvy IR professional will want to adjust his or her company’s story and targeting program to account for these trending themes.
With growing business and market complexity, the role of investor relations has evolved to become more strategic.
The typical Investor relation professional is now tasked with helping the company’s board members understand the way investors perceive business strategies and developing a more engaged shareholder community based on long-term relationships. In some cases, companies are increasingly turning to perception studies to better understand their vulnerabilities and develop a stronger offense.
Delivering messages that gain analyst coverage is crucial to help bridge the gap left by the changing broker model and to compete for coverage with the remaining sell-side analysts and the increasingly influential buy-side analysts, Investor relation professionals require more advanced data sets to provide them with insight into their company, industry, peers and prospective investors.
It’s clear that the era of the Investor relation professionals focusing on reactive communications is long gone. Instead, the modern Investor relation professional is creating proactive strategies for building long-term, engaged relationships with their shareholders. As they do so, the insights that Investor relation professionals provide are becoming a critical part of board-level conversations.
OTC PR Group provides a full suite of small cap public relations services utilizing the latest technologies coupled with relationship building processes to develop and maintain interest from your shareholder base.
We work to build shareholder value by engaging with key-stakeholders and effectively following up and communicating your message, investment potential and corporate vision to investors, Brokers and the media.
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