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“The IRO [needs to be] proactive ... There’s an anticipatory component to the work that they’re doing. It’s not just – okay, here’s our story, which then prompts us to ask questions, but instead here’s our details in a way that we think is going to answer questions and that helps.”
Portfolio manager
“A good IR team will be able to articulate the company’s story just as well as a C-level executive from the company ... There are plenty of folks who can read from the 10-K and not provide perspective, but that is not an element of a good IR team.”
Buy-side analyst
Being “in the loop” genuinely bolsters an IRO’s vision behind the strategy and how IROs should best frame it to external audiences while also aligning messaging with the needs and interests of key internal constituencies. Accordingly, building rapport with these audiences executives, etc.) and leveraging the investor feedback at their disposal can help IROs foster informs overall corporate strategy and sharpens corporate messaging.
Proactivity in Practice
it represents an important opportunity to allay investor worries while setting a company’s investment merits apart from peers who are less willing to engage with the investment community. On average, investors follow over 120 stocks at any one point in time. With market apprehension at cyclical highs and recession perhaps on the horizon, investors today are more apt to be looking for companies they can
drop from their radar screens as opposed to adding new ones. Ongoing, assertive outreach is essential even if only to sustain current levels of support. And the more embedded IROs are in the strategic decision-making structure and communications will be. The driving rationale, obviously, is to avoid surprising the investment community in ways that could send worried investors looking for the exits. Key goals include:
• Advocating internally for transparency and prudent guidance, remembering that operational guidance (factors over which management exerts more control) is often projections in troubled times.
• Open lines of communication and responding to investor questions/requests within 24 hours.
• Candid, frank discussions of challenges while actively countering unfounded rumors or investment theses which may surface.
• Informing management of investor strategic response.
• Keeping the vibrancy of the long-term strategy fresh and resilient while outlining the baby steps necessary to navigate short-term issues.
• Alerting investors as far in advance as possible of material changes in the company’s prospects.
• Planning and providing ample advance notice of upcoming events and opportunities to engage.
• Ongoing, targeted outreach with top shareholders, holders with additional purchasing power and key prospective investors.
• Vigilant monitoring/management of analyst reports.
• Facilitating/encouraging investor engagement with senior management (the single most persuasive way of prompting investment).
rivel.com
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