Investor Relations Analytics Webinar
Market changes are creating increased scrutiny and demands for accessibility to CEOs and CFOs. This webinar offers practical recommendations for directing and evaluating your investor relation activities toward a stock valuation that accurately reflects the company's investment characteristics and future business prospects. The content offered will help your company manage relationships with the financial community as efficiently and productively as you manage the rest of your business.
This Investor Relations Analytics Webinar video is from the Proformative webinar "Analytics: The MVP on your Investor Relations Team" held on January 9, 2013. The webinar features a presentation from Phyllis Proffer, The Heights Company, LLC.
Investor Relations Analytics Webinar
"I think, regardless of the size of the IR organization or whether you're using external resources or not, using analytics to provide your IR communication works for any size public company, pre-IPO or even an established public company.
So my prepared remarks today are organized into four categories shown here. Collectively they represent the very basic framework for creating and tracking the progress of an IR plan. This is a process I've used throughout my
Maintaining access to capital markets, that's sort of the 'who.' Increasing investor knowledge; that's what you're going to communicate. Creating the communications; that's how you plan to communicate. And of course, increasing liquidity and minimizing volatility; that's why you do all of this. You want a fair valuation for your company's common stock; and you'd like to achieve an orderly market.
So, having said that, what is involved in achieving remarkable results? Typically it human nature, we achieve what we measure. So IR is no different than any other department within the corporation. It is a function that involves the highest level of the company in a very public way. Therefore, it deserves a well-thought out strategy with measureable objectives and the ability to monitor the progress toward that fair valuation and orderly market.
Also, by using analytics you have the ability to assess and adapt your activities as you go along. There will be unexpected events; there will be a change in corporate strategy at any given time, expansion,
And as we look at some common hurdles, why companies don't do more planning than they could do, they may be establishing objectives that are unrealistic or difficult to measure. Reacting to the demands of an increasingly short-term focused investment community is a very common hurdle.
There has been a growth in high-frequency trades, program trades. There is a speed of information about what we do today, and they can cause some very real important distractions. A plan's going to bring you back to where you need to be and focused on the things you need to be focused on.
There is also a tendency to spend a disproportionate amount of time with the sell side. And forgive me, here, I have throughout this presentation used the term sell side and buy side. For those of who are new to IR, sell side are brokerage research analysts.
The buy side are institutional investors who actually buy and sell shares and hold shares of your company stock. But spending a disproportionate amount of time with the sell side; these are very demanding folks. They publish research coverage on your company. You'd want to make sure that you're allocating time to speak directly with your shareholders, whether they are existing or prospective shareholders.
You don't want to use a sell side analyst as your gatekeeper. Investing time with the wrong investor, and we're going to spend quite a bit of time talking about shareholder mix, different investment styles, and the importance of having investment styles match your investment characteristics.
Sending mixed messages; we'll be talking about that. And offering you some analytics that you can use to evaluate the progress that you're making on your IR activities, and indicating any changes that may need to occur. So, you're not going to need just to rely on your stock price alone, and we'll explain later about why that could be an issue.
Right now John has a polling question before we proceed.
John Kogan: Thank you. So, this is the first of the three CPE polling questions that I mentioned earlier. So I'm going to go ahead and launch it. That should show up on your screen in about two seconds. There we go.
Please select one of the items below that best describes investor relations planning at your company. Once again, we'd like to hear from everyone, whether you're here for
But, it's quite a simple question that's statistical in nature, and actually we will turn these results around if we have enough time during the Q&A portion of today's events so everyone can see where everyone else stands.
I'm going to go ahead and leave this out for another five seconds, so if you haven't gotten your vote in please do so quickly, and then we'll close it down and get back Phyllis. So I'm going to go ahead and close down right now, and Phyllis I'll show your next slide, and back to you.
Phyllis: Great; thank you so much. So, let's move on to applying analytics to maintaining access to capital markets, essentially the WHO. We all spend so much time on
The investment styles of institutional holders should match the investment characteristics of the company. There are tens of thousands of portfolio managers with different investment styles. You don't need to be all things to all people. Your company's investment characteristics will be attractive to particular investment styles.
You do, however, and it is your responsibility to get on the radar screen of appropriate institutional investors. It's also your responsibility to help them understand why your investment characteristics match their investment styles.
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Shareholder mix is a great measure of message clarity and time allocation. So an analysis of your shareholder mix also leads to an efficient tool for targeting institutional investors for future changes in your investment characteristics. As your company continues to grow and evolve your investment characteristics will change and so will your shareholder mix. And the important part about that is that the investment styles of your shareholders definitely influences their perceptions, which can make it difficult to manage expectations if those investment styles do not match your investment characteristics.
What I'm saying essentially is growth stocks should have growth investors; value stocks should have value investors. And it's never that clean and neat; there is always a mix, and in the next couple of slides I'll show you how that can happen and how you can change that.
So, growth investors, and there are different segments of growth investors from core growth to aggressive growth, to growth at reasonable price, but they're seeking stocks with earnings expected to grow faster than the industry in overall market.
Value investors are seeking stocks that they believe the market has undervalued despite the company's long-term fundamentals. There are also different segments of value investors, from deep value, looking for significant change in a company to core value.
The bottom two on this chart; hedge funds, aggressively manage portfolios using advanced investment strategies, and hedge funds can be short or long, so you can't make blanket statements about hedge funds, but the shorts are generally of a very high turnover characteristic. So they have to stay very close to the story. So it's a little bit deceiving; the people you will hear from most are the people that are probably trading your stock more frequently.
They are also the folks that become very good clients of brokerage houses. So as you consider marketing your company with the help of a sell-side analyst, just keep in mind their biggest clients are probably hedge funds. So when you go to conferences, or you market one-on-one meetings with a brokerage house, you will be talking to a high proportion of hedge funds. So, if you spend most of you time with hedge funds, a lot of your stock is going to be held by hedge funds, and they're going to represent a very large proportion of your investor mix.
The way you correct that is targeting growth or value investors, depending on your investment characteristics. You need to be strategic and very fair about how your time is allocated.
And let's take a look at a couple of examples. I pulled this from an analysis I used to prepare an investor relations plan for a company, which had lost . . ."
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