In the second installment of our new regular series on IR basics, seasoned IR professionals share their best practice knowledge and advice on investor targeting first-hand.
To be a successful IR, you need to become a master matchmaker. The investor relations team should identify and engage investors that are suitable for the company’s shareholder base. In most cases, that means looking for long-term, active investors who share management’s vision. But it can also refer to other goals, such as adding retail investors to increase liquidity.
The benefits of effective investor targeting are manifold. Help companies maintain shareholder bases that match their current and future profiles. It helps avoid stock register risks such as too fast money or too much concentration. This ensures that management’s time is allocated to the most important investor meetings.
Camilla Bartosiewicz is Chief Communications Officer at Altus Group, a market intelligence provider for the commercial real estate industry, and an award-winning IR professional with over 15 years of experience. Bartosiewicz says the first place to start targeting investors is to identify the most likely buyers. This often means examining the existing shareholder base.
Bartosiewicz said: IR magazine“Over the years, we have come to understand that having the right investors aligned with our corporate strategy is very constructive and helps us withstand periods of market volatility. rice field.”
The Investor Relations team can identify opportunities for existing shareholders to increase their standing, she adds. We look at who is underweight and who might add more.
goal and target
The next stage is goal setting and target identification. Depending on the circumstances, companies may set overarching goals for their shareholder base, such as adding institutional investors, increasing liquidity, increasing international exposure, or attracting ESG-focused funds.
Altus has transformed, moving from a traditional professional services orientation to a technology company with a growth profile. To support this shift, Bartosiewicz focused on growth and his Garp-focused fund and technology investors who understand the business model. There has also been a move to increase ownership in the US market, the deepest pool of capital in the world.
To identify specific targets, Bartosiewicz recommends that companies consider a wide range of criteria.
“On a tactical level, start by analyzing how your company is positioned against its peers. Whether you do it by sector or by financial profile, I try to understand if I’m in the sweet spot of my home.I’m trying to target it,” she commented. She also thinks about which investors might influence our valuation. Other considerations include location, industry sector allocation, peer ownership, and investment style.
Bartosiewicz has worked as a one-man IR team for many years. With a lean setup, she says technology provides invaluable support.
“I use technology to combine screening and matching,” she says. “I never imagined I could do this [the job] Efficiently without it. Once you’ve established your criteria, you’ll have the information to build your target list within minutes.
To execute their targeting strategy, IR teams typically set up engagement calendars featuring important events such as investment conferences, results announcements, investor and analyst days, and non-trading roadshows.
Traditionally, the sell-side serves as the primary facilitator of meetings with investor targets, but in recent years this has been increasingly complemented by direct contact between companies and investors.
“The post-pandemic shift to virtual meetings has seen a noticeable trend of buy-side investors interacting directly with companies,” said Bartosiewicz. “It would be more efficient to cut out the middleman and schedule a quick phone call. But I would argue that the sell side will always be an important conduit for investors. still rely on sell-side research and meetings to
There are various ways for IR teams to monitor the progress of their targeting efforts. Sometimes it is tempting to focus on quantitative measures, such as the number of meetings held or attended.
Tracking this is important, but experienced IROs often focus on softer measures of success, such as meeting quality and effective use of administrative time.
Altus Group’s key metrics focus on the long-term goals of its shareholder base. That’s more institutional investment, more growth and his Garp funding, penetration into the US market.
More generally, Altus tracks valuation multiples and whether target investors end up becoming shareholders to ensure that time is being spent wisely. The company also uses investor perception surveys to gauge sentiment and explore whether corporate messages resonate with new owners.
“Targeting can be a complicated process, but the ultimate goal is to find the best investors for your business,” says Bartosiewicz. “It’s about reaching out to the aspiring audience who are most likely to become your shareholders.”
This article was originally published in the Fall 2022 issue. IR magazine.