Short and long-term goals and objectives can include identifying investors who are interested in your sector and/or known to have invested in your peers to meet with over the course of the year. (Although making sure you also meet with your current investors should also be a priority).

Okay, so you (the IRO) have your targeted list of investors, now what? What follows are some thoughts to help you and your management team make the most out of the one-on-one meeting.  I’d like to thank Rivel Research Group as these ideas are derived from their best practice reports based on topics of interest from members of the Rivel Intelligence Council (comprised of senior level investor communications executives) and assessed by buy-side investment professionals in both the US and Europe.

Adequately preparing the management team is essential. It may seem obvious, but having a discussion about Reg FD is important – as this meeting should not be used to divulge new information.

Another effective way to prepare management is compiling a list of questions and conducting a mock Q&A. As the IRO, you should work with management to come up with a list. It can also be useful to go through transcripts from previous events such as an earnings call to ensure a good sampling.

Be sure to include tough questions and how you will handle them if asked.  It is important that management not get defensive if asked difficult questions and be conscious of not sounding too rehearsed. As a one-on-one may do more harm than good if management comes across as overconfident, hard selling or as setting overly aggressive goals.

You should also take into consideration who you are meeting with and tailor the information accordingly.  For example, if this is a new investor, you may want to give a bit more detail around certain areas than you would for someone you have met with before. That said, don’t get caught up in too many details – stay focused on high-level details such as the ‘how’ behind the strategy.

Insight and transparency into growth drivers and key business goals are preferred over a regurgitation of previously disclosed information shared via press releases and on earnings calls.

A decision should also be made as to whether using a powerpoint presentation to supplement the discussion will be useful.  If you do decide to use a presentation, make sure the slides have minimal text and instead whenever possible, use visuals. Doing so, will help alleviate the temptation to read directly from the slides.

If it’s possible, having an Internet connection will allow management to access the company’s website to show a video or other asset that is housed on there on the fly.

Bear in mind, that whatever additional materials you choose, that they are helpful and relevant to the discussion. Also have a few printed copies and/or a softcopy on a usb key to leave behind – just in case.

Lastly, if there is anything that comes out of the discussion that needs to be followed up on, do so.  For example, providing supplemental material to help address an unanswered question. It also doesn’t hurt to send a follow up note to thank them for the meeting.

The buy-side values one-on-one meetings as it gives them the opportunity to have direct interaction with senior management.  Companies can maximize this experience by considering some of the ideas presented above.

Related posts:

1. New Rivel Research: Buy-side Perspectives on Best Practice IR Websites Rivel Research is well-known for their ability to gather, analyze...
2. Rivel Research: Transparency Key Factor in Buy-side Definition of Superb IR Earlier this year, I wrote a blog post that recounted...
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Advisors understand that social media is one of the fastest growing communications channels in the world. Social networks improve the ability of financial advisors to increase the amount of clients under management as well as increase their interaction and visibility with them. Unfortunately financial advisors still struggle to adopt and maximize social media and its benefits. Our study points out many of the challenges faced by financial advisors in utilizing social media, but it also seeks to emphasize the reasons behind these struggles while offering advice to help the financial community succeed.

From July to November 2011, linkedFA asked 1,599 advisors* 12 questions that sought to answer:

1. How do advisors spend their time online?
2. What goals do advisors have for social media?
3. What social networking tools do advisors find to be the most successful?
4. What are the biggest stumbling blocks

Here are some of the highlights:

• Nearly 80% reported using LinkedIn
• Almost 40% are on Facebook
• Only 7.6% reported using no social media for business

ROI

• 43% reported seeing very little to no returns from social media
• 23% were unsure of their returns of using social media

GOALS

• 37% sought referrals from current clients and colleagues
• 24% sought to manage their online reputation
• 15% desired to register new clients

BIGGEST CONCERNS

According to nearly half of advisors surveyed, compliance is the biggest concern limiting their ability to effectively utilize social media. FINRA guidelines for social media require constant archiving and approval and the possibility of any failures can result in firms being hit with substantial fines.

SOCIAL MEDIA USAGE

• 34.3% reported only creating a social media account and responding reactively to contacts
• 31% reported logging on only once per week
• 10.96% reported logging on to a network daily to view and post information
• 70% reported spending more than half a day looking at news stories online (half reported spending over an hour per day viewing news)
• 73% reported their primary source of professional news was internet-based (with 49.64% reporting financial news sites as their primary resource)
• Almost 30% sought enhanced capabilities with regards to sharing news stories through social media

MOBILE USAGE

• Just under 40% reported using their mobile device for social networking as more or more than their desktop
• Only 27% reported using mobile social media for more than just browsing

You can download the executive summary and/or whitepaper by clicking here.

* Of those surveyed 34.43% reporting having over 200 clients, while more than 60.15% reported having over 100 clients. The survey reached a wide distribution of financial advisors, with 73.77% associated with independent broker-dealers and 13.73% at bulge-bracket firms.  Respondents had an average of $50.8 million of assets under management.

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Josh Clark debunks the 7 Myths of Mobile Web Design: http://tnw.co/u9MqRR

Lessons from the Australian Parliament’s iPad Revolt: http://onforb.es/tDj75g

Google to end support for Blackberry Gmail app this month: http://bit.ly/uAgTqI

Company Tweets and Regulation FD: Material or Immaterial?: http://bit.ly/uJ3JLf

A New Way to Learn About Bloomberg: http://ow.ly/7jAZA

Global Buy-side Attitudes Regarding Superstar CEOs: http://bit.ly/s9ety1

When Placing Ads, Don’t Underestimate the Value of Mobile: http://goo.gl/5W4lS

It’s Official: Flash Mobile Player is Dead: http://on.mash.to/tDy9WA

Social Media Use in Financial Services: Our Ongoing Research: http://j.mp/sIvGir

Raymond James Gets Social Media Right: http://stks.co/14QY

Infographic: The social media crisis communications decision tree:  http://bit.ly/t1uera

To Time or Not to Time?: http://stks.co/10f8

US Buy-side speaks out on credit rating agencies: http://bit.ly/t9XgDn

Infographic: How, When & Where People Share Content: http://selnd.com/vQvolp

The Shareholder Letter – NIRI Presentation by Rob Berick: http://slidesha.re/rt1m01

Social Media Compliance Policies For Financial Firms: http://ow.ly/7p8EH

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C: Often I hold your site up as a best practice example for other companies but the response I get from some IROs is, “We don’t have the same size team as a company like Potash – we don’t have that kind of budget.” What’s your response to that?

T: People think we have a much bigger team than we actually do. We have only just recently hired someone specifically for the web and we’ve been a two-person department up to that point.

The reality is that you can have a good site, regardless of your budget by addressing some of the things we talked about before: navigation, architecture, usability and a good story. These things are not expensive, they just require thinking and strategy – it’s a necessary investment of time upfront in ‘thinking’.

PotashCorp makes it easy for analysts to immediately access data they would normally have to spend hours building models in order to view using the datatool as shown below:

With our site the majority of the cost was in the backend development, but 70% of the effort went into the thinking, planning and strategy.

The big question is, “Have you thought about your story? Have you thought about how to communicate it and the assets you already have in terms of telling the story (photos, presentations etc.)?”

If you do the proper strategic planning to ensure that you achieve your communications objectives and then build the site so it’s easier and more cost effective to maintain and evolve, the time and money you spend will give you a significant payback.

C: Potash tends to put more content on its site than most organizations do about the company, market opportunity, investment proposition – information that provides a broader context. Where did the idea come from to do this? Did you find that investors were asking questions about this kind of information?

T: Absolutely. We struggled for many years because we are in an industry that not many people are familiar with. If nobody understands your business, it’s not going to be easy to get people to invest. So we’ve focused a lot of energy on how we tell our story and how we’ve evolved it.

Potash provides good context and background on their company, their markets and their investment proposition via the “Why Invest” as shown below:

C: Your story is really tight now – it’s very compelling.

T: And it continues to evolve and improve. That’s the great thing about the web. If you go out to a conference and you’re telling the story and you feel that something is not quite where it should be, you can go back and tweak it. It’s easy to evolve your story online – you don’t have to wait for the next annual report to come out in order to do this.

C: Prior to doing the things you’re doing now, before investors understood your story, did you find that conversations were taking place at a much more basic level? Were the calls more repetitive than they are now? In other words, do you find that now your conversations with investors are more enhanced, because they understand your company better based on the information they are able to access on your website?

T: Absolutely. This is the payback. We have a very small team relative to other companies. We had two people, so when the interest in agriculture exploded in 2007, (and with it the interest in PotashCorp as a major play), we were under water with the demands for information. And approximately 70% of the questions we were being asked were all the same. So if you build your site in such a way that the information users are looking for is easy to access, people are willing to do their own work to find it. So by the time we’re talking with them, much of the basic information has already been dealt with – and if these same questions do come up, you can direct them to your site.

C: We have a client who used to get 50 calls a week from individuals in the early stage of the investor life cycle, who asked the same questions in call after call. After structuring the website to better tell their story, the number of repetitive 101-type calls reduced to just 2 per week. Now the calls she is getting are with investors who already have a basic understanding of their company and value proposition.

T: That again speaks to the payback. People make excuses as to why they can’t do a more effective job of the web – but look what they’re missing!

C: I like the way that you don’t try to cover everything in an FAQ. Instead, you thoughtfully layer your story so the user gets more and more information as they move through the site. It’s very engaging and it makes a big difference to the experience.

T: That’s what we set out to do. One of the biggest changes we made with the new site was not to cut and paste content from documents like the annual report, but instead to specifically write content for the web. Doing this allows us to layer the information more effectively and in a way that makes it easier for users to digest the information.

C: What about your analytics – are they telling you that site users are looking at the context you provide around your organization? Or are they just looking at the filings and press releases?

T: We use Google analytics and it shows us that people are doing their research – they’re reading the background on the company and the industry. Of course people that come back time and time again are mostly looking for the new updates. That comes back to addressing all phases of the investor life cycle. Overall we get a broad use of content across our site.

C: Is there anything that you think companies consistently miss in planning the strategy for their website?

T: Most companies don’t take enough time to think about their stakeholder groups in terms of ‘what do they want?’ and importantly, ‘what do you want from them?

C: It’s interesting that you should say this. I’ve been saying this a lot lately, especially in consideration of the template providers. It’s not just about making it easy to find things, it’s also about, what does your company want to say? What content do you want your users to see? And how do you present that information to move your users through your priority content?

T: Not addressing that aspect is a fundamental flaw. Companies have a communications opportunity and if they don’t use it, that’s a missed opportunity. Companies have to think about the web that way – it’s a part of a communications strategy. You have people coming to your site, but you’re also outreaching and you have to be telling your story, you have to reflect your brand. There are CEOs and CFOs that don’t understand that there is a payback for doing this right and doing it well happens over time.

You can’t establish the web channel quickly. You have to make the website a good experience – so users don’t have to think that hard and so they regularly come back for more information. This helps establish your channel.

Our strategy really worked for us in the BHP situation. Our stakeholders were already used to going to our website for information and so it made it easier for us to address this situation. We had the ‘go’ (issues) website up and ready in no time. We had the story. We had video of our CEO discussing the takeover on YouTube, and we had a good experience already established. The web was essential to addressing BHP’s acquisition efforts. That’s the type of payback that you get – when a crisis hits, you’re ready.

C: What are the top 4 things a company should do to have a great website?

1. Understand your stakeholder needs and your organizational objectives.
2. Start with an overall communications strategy to ensure consistent messaging across all communications and therefore, a better understanding of your story.
3. Build the site in a way that is easy to use – don’t make users have to think to find things.
4. Ensure that your site is easy to maintain and can evolve to keep pace with new advances in the way the web is being used.

C: My feeling is that a website is never finished – so how do you plan for continuous improvements?

T: You’re right – it’s the story that never ends. There’s two things that we do, one hard and one soft:

1. The hard one being the technology side – you need to use programming that can evolve. And we rely on Zu quite a bit for their advice on this. You don’t want to corner yourself with technology that doesn’t evolve.
2. In terms of the soft side – the content and the thinking behind what we do – we conduct research and we rely on our vendors in terms of what they see: Creative Fire, who handled the redesign and were the primary driver for assisting on the communication strategy; and Zu, who were essential in planning and technical  execution (bringing together the big outside box ideas). We talk to Q4 and read your information, we’re involved in the CICA, we’re involved in CIRI etc. The research aspect is about being out there and having your finger on the pulse and looking at what’s going on in the web world – and not just in the corporate world, because ultimately what’s happening beyond ‘corporate’ ends up leaking down. It’s looking at ideas that are working well in other areas (such as B2B and B2C) and then applying these in the corporate environment.

C: Anything else you’d want to add?

T: Just keep up the good work – the research you’re doing, the evolution of your product, it’s very important.

Related posts:

1. PotashCorp: The Makings of a Best Practice IR Website – Part 1 Through my involvement over the past 10 years as a...
2. New Rivel Research: Buy-side Perspectives on Best Practice IR Websites Rivel Research is well-known for their ability to gather, analyze...
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Recently I interviewed Tim Herrod, Director, Treasury (C.A.) and former Manager, Investor Relations with PotashCorp, who was instrumental in helping to plan both the award-winning former site and current redesign, which was launched in January of 2010.

Having had 18 months since the re-launch to gather feedback and metrics as well as surviving the high-profile hostile takeover by BHP Bilton, I caught up with Tim to find out more about their approach to web communications and the impact this has had on their IR program.

I have excerpted segments of our interview in a two-part series, beginning today:

C: When I heard you speak a few years ago at a CIRI conference, you said, “Potash views its website as being its primary communications channel. How did you come to that conclusion and why do you view the website as being so important?”

T: Very simply, the web is how people get information. We have a large institutional following, but investors are not institutions – they are individuals within the institutions. These individuals may be at very different points in the investor life-cycle and as such, may have very different information requirements. Whether it’s up front where they have to spend a tremendous amount of time modeling, learning the business, learning about the management team and asking questions – everything that’s involved in making that first ‘invest or not’ decision – those investors have to be covered off at that particular stage of their life-cycle.

Once they have that base knowledge established, they then go into another stage of the life-cycle, which is ‘keeping up’. At this stage, they need certain types of information to help them maintain their view and understand the things that are happening at the company – things that are driving our business, our earnings and therefore, the value of the company.

We have to consider that everywhere around the world, we have individuals who are at different stages in this life-cycle. And we have to be prepared to address their information requirements, wherever they are and whenever they need it. The web allows you to do this 24/7.

There is a place for various forms of communication: speaking at conferences, producing an annual report once a year etc., but when you look at how people are getting information today, it’s clear that the web can consistently deliver what they need, when they need it and in a very dynamic way. This makes for a simple value proposition to take to management to say that we need to build out this channel. And that’s what we did. It was a no-brainer.

PotashCorp Communicates transparency right from the homepage (as shown below) where site visitors are invited to ask the COO a question:

C: When you set out to redesign your new site, what were your top objectives?

T: We did a creative brief and set our goals upfront. They were:

1.   To align the site with our organizational goals and key messages. We have a broader communications program – the web is just one part of that, although it certainly is the main component for our investor stakeholders. From a consistency standpoint – so that users understand our organizational goals across all our communications – we wanted to make sure that the website was aligned with everything else.
2.  To update the technology of the site to align with current best practices and better prepare us to evolve with advances in technology. Although nobody knows where technology is going to take us over the next few years, we didn’t want to be held back, as we were with the old site. We are now better prepared for evolution than we were before.
3.  To update the design on a number of levels. We reduced the number of sections to better relate to our primary users. For example, we felt that corporate governance and sustainability were core values “about” PotashCorp and relevant/critical to all our stakeholders, not stand alone main navigational items, so we moved these into the ‘About’ section. We also wanted to make sure that the application of the brand and the look and feel was consistent across the site. The former site had sections that were bolted on and so the user experience was inconsistent as they moved through the site. We wanted to improve that experience across the site and ensure consistency of the brand. Although the IR department drives the site at Potash, we involved other groups in the project, such as HR, and this really helped to build out the content and ensure a good experience for all users.
4.  To simplify the stakeholder experience by eliminating repetition, tightening up the navigation and making it easy for users to access content (without having to think). We accomplished this through things like relational links, the library, the data tool etc. To prepare for our redesign we did a user survey on the old site, where we asked a concise set of questions such as: why they came to the site and what they were looking for – this helped guide our planning. Another key aspect of the simplification was writing specifically for the web, which is something we hadn’t done before. Previously we were copying and pasting from other documents. Writing for the web causes you to think about how you’re going to layer content to take advantage of web tools and make your information more accessible and interactive.
5.  And finally, we wanted to respond to stakeholder needs to provide more relevant and frequent updates. If you look at the ‘News’ section on our site in comparison to other sites, we have it organized by topic, by keyword, by date. And it’s not just for investors – it addresses all our stakeholders. We have industry information, career, community and financial news. Being successful with this approach is about having tentacles that reach out to all areas within the company and saying, “What’s going on?” and then having a content development process for this information. People across the company are constantly thinking ‘this information might be something that our stakeholders would be interested in’ and then the technology has been set up to accommodate the flow of information.

PotashCorp integrates news for all stakeholders and allows information to be accessed by date, topic or searched by keywords (as shown in the image below):

Another example of how we responded to stakeholder needs is in the creation of our financial data tool. We went from having 7 analysts in 2006 to having 32 analysts now. This is just on the sell-side, and if you think of the buy-side and the people around the world who are building their own models, that’s a lot of effort going into something that you could make easier for them. Instead of leaving them to do that work, we built a data tool and populated it with the information that people are looking for. Then we can say, “Go to the website.”

C: Your site has already won some prestigious awards. What kind of feedback have you received from your stakeholders?

T: The feedback we get from investors is very positive in terms of how well we address their needs.  The bankers tell us that when people have questions about the company or the industry… they say, “Go to the Potash website – it’s the best website in the world.” You know you’ve hit the mark if you get feedback that the early stage investors get the information they need.

C: I think that if you design a website properly – and by design I mean look & feel, structure, navigation, content – it almost acts like a conversation.

T: Yes, and if you put a face to it, then you know who the conversation is occurring with. That’s why you see so many photographs on our site of our people and management team. You can’t meet with all people face-to-face but our approach shows that we are trying to connect with people – we are trying to let them see the whites of our eyes.

You can’t just focus on the actual content – the words only – because how it’s presented is so much more important. If you can’t deliver it successfully, the web just doesn’t work.

C: I agree. When I look at investor sites, particularly in the U.S. where templated IR websites are so dominant, they are often little more than repositories of regulatory filings and data feeds. If you want more context about a company and its investment proposition, you really have to dig for it. And frequently that information is just not there, so the site is doing nothing more than addressing compliance requirements. Do the companies who have these filing cabinet sites just not understand the web or have they just not prioritized it?

T: It seems that they just don’t recognize the opportunity they have with the web or the impact that a good site can have on their IR program. I just gave a presentation a couple of months ago to the CICA with Tony Zuck from Zu and Kelly Freeman, Manager Investor Relations at PotashCorp – the person responsible for our website now. As we prepared for this presentation, Tony spoke of numerous examples of companies who had great stories that were buried deep within their website or in a PDF tucked away in a library. Most users would never see this great information. This is just a lost opportunity.

For any publicly traded company, the number one concern of investors is “what’s the big bogeyman that is hiding out there – that I don’t expect – that’s going to get me.” The way you communicate on the web can show that you are transparent, that you’re putting the information out there and investors can see the whites of your eyes. It helps to build trust. That’s a very important thought process that you have to go through in planning your website.

The web is not just a document repository; it’s a communications opportunity, a management opportunity, a strategic opportunity. The companies that do the best job of brand and brand governance, not surprisingly, also typically do a good job in their web strategy and their stakeholder outreach. These companies are thinking about brand governance when they are creating their communications strategy for the web.

C: With the recent market volatility, I have feedback from some IROs who have been charged with cutting communications budgets, including reducing their spend on web communications. It seems strange to be cutting back on communications at a time of heightened investor uncertainty and concern. What do you think?

T: I absolutely agree with you. We did not pull back budgets, although I’m not sure it’s a budget question only. It’s more important to communicate in a crisis (of any kind). You may get sucked into an economic crisis by no fault of your own, but the business has to have a strategy for facing these challenges and investors and other stakeholders need to understand your strategy, and hear from you often. Uncertainty adds risk, risk reduces valuation, and transparency can help to offset that. There are newer, more innovative and less expensive ways to communicate MORE. So if facing budget pressure, be more innovative – and the web/social media provide great opportunities.

We’ll be issuing part 2 in this series soon – stay tuned!

Related posts:

1. PotashCorp: The Makings of a Best Practice IR Website – Part 2 This is the second part of an interview I conducted...
2. New Rivel Research: Buy-side Perspectives on Best Practice IR Websites Rivel Research is well-known for their ability to gather, analyze...
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That’s why we’ve decided to put together a list of some interesting things we’ve been reading and subsequently sharing with our followers for the week of August 1, 2011:

Paper on investor relations and social media in the new 2011 IAOC journal: http://bit.ly/neBOcu

Nielsen Ratings Coming to Facebook Campaigns This Month: on.mash.to/qB9jqv

Buffett Can’t Get Analysts to Say Buy Berkshire: http://bloom.bg/qTtBAm

How Washington took the U.S. to the brink: reut.rs/qeiaya

More findings from survey of European fund managers and analysts: http://bit.ly/nERrMj

Financial Analysts — We Love the “Beat”: http://ir4.me/dRShK

Is It Time to Invest in Your Investor Day?: http://t.co/K68XCPg

Will Netflix CEO Hastings usher in a new era for investor relations? http://ir4.me/dbCHj

SlideShare presentation: IR 2.0 International Benchmark Study: http://t.co/k9FmTkh

5 Tips for Integrating Social Media with Offline Events: http://bit.ly/nNudbT

8 emerging social media archiving solutions: http://bit.ly/rfyhBC

Happy Reading!

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1. Trending on Twitter: What Q4 is reading & sharing on social networks – week of August 22, 2011 Here’s this week’s roundup of what we’ve been reading and...
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That’s why we’ve decided to put together a list of some interesting things we’ve been reading and subsequently sharing with our followers for the week of July 18, 2011:

Is the SEC redefining Insider Trading: http://t.co/XMYHB2B

Google+, Investor Relations and Lawyers’ Panic Attacks: http://bit.ly/mOXqND

First Level 1 ADR company gets verified StockTwits Account: http://t.co/JgR0L4S

55% buy-side expect Twitter for Investor Comms to increase over next year: http://bit.ly/o6Yi2S

Why No One Should Believe Apple’s Earnings Guidance: http://t.co/BzymxAj

Trader pleads guilty to threatening financial regulators: http://nyti.ms/nPQMv6

Social Networking Policy: Write Now or Regret Later: twb.io/jQNBP5

CSA finds 55% of issuers reviewed deficient in corporate governance disclosure: http://post.ly/2TvPv

The next five social media trends and their impact on marketing: http://bit.ly/ohNa3l

Happy Reading!

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2. Trending on Twitter: What Q4 is reading & sharing on social networks – week of August 8, 2011 Social media has made the sharing of ideas and information...
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To this end, on a quarterly basis Rivel issues best practice reports based on topics of interest from members of the Rivel Intelligence Council (comprised of senior level investor communications executives) and assessed by buy-side investment professionals in both the US and Europe.

What follows are some of the key findings from the latest report that focuses on European and US buy-side investment professionals’ attitudes regarding best practices in the design and content of IR websites.

I’d like to extend my thanks to Rivel’s CEO Brian Rivel for allowing me to share some of the information from this report on our blog.  Brian sums up the findings:

The website as an influencer of investment decisions has risen to the highest level we have ever seen in our research.  Clearly, companies need to think more strategically about how they deliver the message and value proposition through this medium.

A total of 288 in-depth telephone conversations, with respondents virtually all from EU countries (split between 140 US buy-side investment professionals and 148 in Europe) were asked a series of questions that garnered some interesting findings:

• Relatively few IR websites are considered truly excellent among investors in either the US or Europe.
• A poor IR website fuels more investor frustration than an excellent site prompts satisfaction among its users.
• The best websites go beyond providing access to financial data and include greater clarity and insight on the company’s business strategy.
• The best websites are intuitive and ease investors’ search for insight as well as contact information.
• The best websites are those that keep presentations and earnings calls posted for the longest periods of time (at least one year, preferably longer).

The IR website remains one of the first places that investors go to access company information.  The importance of the IR website is underscored by the feedback garnered from this report.

Related posts:

1. Rivel Research: Transparency Key Factor in Buy-side Definition of Superb IR Earlier this year, I wrote a blog post that recounted...
2. Best Practices for conducting one-on-one meetings with the buy-side An effective IR strategy has many components.  Such as setting...
3. IR Best Practice: Get to know the Buy-Side Recently, I responded to a discussion on LinkedIN entitled “Required...

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The Buy Side works for institutional stock owners and manages trillions of dollars for every type of investor (individual, pension, corporate, government, museum, hospital, charity etc). Their clients are as global, as is the investment universe and there are many ‘flavors of the buy side (value vs. growth; quant vs. fundamentalists; long only vs. hedge; ‘People’ people vs. ‘Numbers’’ people; ‘deep’ value vs. ‘intrinsic’ value vs. ‘momentum’ players; high frequency traders etc.)

The objective of the buy side is the same as the sell side: to make money for their clients by analyzing information to make informed decisions. The sell side’s client is primarily the buy side. The buy-side’s client is your company’s OWNER.

Victor began his presentation by making a couple of points that really resonated with me.

• He asked the question, “Do you want shareholders or shareowners?” The difference between the two is that a shareholder is not as ‘involved’ with your company. They don’t understand your organization at the same meaningful level and therefore, are not as intellectually/emotionally invested, and will move off your stock more easily when times are not good. A shareowner, on the other hand, is someone who is deeply involved with your company in understanding its unique investment proposition – its strategy to increase shareholder value, the strengths of your management team etc. This type of investor has a longer-term view and is more likely to steer the course during down times.
• He then made the point to “Run your businesses well and investors will own your stock.” (Then of course, the IROs job is to effectively communicate how well their company is being run. They can assist the buy-side by assembling the right information and by providing analytical techniques.)

IROs are faced with somewhat of a conundrum in terms of who they listen and attend to:

• The Buy-side – the people who actually buy your company’s stock
• The Sell-side – the people who influence your company’s stock price (using coded language rivaling the NSA’s, according to Victor)

At the end of the day, companies must make sure that they are providing the right information to both sides in order to facilitate a better understanding of their organization and investment proposition.

Working Well with the Buy Side

Victor had a few tips that I have lifted from his presentation:

1. Return phone calls and emails on time
2. Provide accurate and meaningful financial statements that are the best possible snapshot of reality at a given time
3. Clearly communicate management’s game plan and why it’s different/better than your competitors strategies
4. Define the relevant benchmarks (it’s not all about GAAP). Tell us how you think about your business, your competitors and your industry
5. Help us understand corporate esprit de corps, enduring strengths and weaknesses, and what is important to you
6. Provide access to senior management and give insight into what makes them tick
7. Provide general industry information. Don’t assume that we understand your business.
8. Be accessible and knowledgeable

Throughout the years I have had numerous IROs tell me that Institutional investors are interested in the numbers – the key metrics. Victor’s recommendations make it clear that the buy-side is also interested in much greater context about your organization and its unique strengths, your industry, your management etc. So it’s not just about providing ‘Our Industry 101’ to unsophisticated retail investors – anything you can communicate to facilitate a better understanding of your company and its unique proposition is worth doing for all audiences.

Getting to the Buy Side

In terms of targeting, learning more about who owns your competition and contacting them is well advised. Institutional investors often like to focus on a specific sector/type of business.

Importantly, Victor said that if companies focus on providing the right information and producing the numbers, buy side analysts will ‘find you’.

He said that it’s also important to get management on the road to do one-on-ones and to attend a limited number of industry conferences. (He said that a CEO should be prepared to spend about 2 hours per week in investor-related meetings/conversations. A CFO should be prepared to spend about 8 hours per week. In terms of conferences, a CEO should attend 2-4 conferences per year and a CFO should attend about 8.)

A Few Other Tips

Victor’s presentation was filled with valuable tips that impact the day-to-day role of the IRO. A few other words of wisdom included:

• Get away from focusing on EPS 100%… stress Economic Value Added, ROIC etc.
• Focus on investors first, the sell-side a close second and everyone else a distant third. It’s important not to ignore the bread and butter investor.
• Don’t assume that the buy-side listens to the sell side, because many don’t.
• Provide more clarity around options/compensation structure because this is a chief and growing area of concern for investors.
• Don’t rely solely on an investment banker or outside IR firm to find and develop shareholder relationships.
• Ensure that all types of transcripts are available on major services.
• Don’t go out of your way to ring the bell and chat with the CNBC anchor – although it’s a ‘feel good’ event, that’s not what will impact the buy side.
• Beware of private equity – buy side analysts are wary of them too!

Summary

I was very impressed by Victor’s succinct presentation. He offered a lot of good advice – a ‘play book’ to help IROs better deal with the buy side.

As a final point, Victor felt that consistency in how you communicate is very important.

And making information easy to access, readily available is key as well. He said to consider other channels to help push information out further and faster, such as Twitter, which gets your information out in real time (as an adjunct to any material information you release through traditional channels).

Finally, make it easy for investors to sign up for communications, events, but don’t overwhelm with too many email alerts or your audiences will stop paying attention.

Related posts:

1. NIRI Fundamentals re-cap: Understanding the work of the Sell-Side Analyst Last Friday I returned from NIRI’s ‘Fundamentals of Investor Relations’...
2. IR Best Practice: Get to know the Buy-Side Recently, I responded to a discussion on LinkedIN entitled “Required...
3. Best Practices for conducting one-on-one meetings with the buy-side An effective IR strategy has many components.  Such as setting...

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Typically, three or four questions are asked.  But this week, the first question dominated the hour-long session. @meetthestreet asked:

Q1: Institutional Investor recently wrote about social media’s role in equity research: http://bit.ly/94w06K. Do you think this has legs?

Here is a snippet from the article:

Bolstered by the low cost of online publishing and the rising popularity of blogs, discussion forums and commenting, a growing number of niche web sites are creating opportunities for new forms of investment analysis to emerge — and for buy-side professionals, even those at rival firms, to collaborate and learn directly from one another. These social media web sites are supplementing, and in some cases supplanting, the traditional Wall Street information ecosystem that transmits sell-side investment research and stock calls to the buy side.

Here’s a recap of the conversation (a subset of questions evolved from the original question, so I have grouped these together to make it easier to follow along):

• @meetthestreet: “SumZero has attracted 4k institutional investors in 2 years in pure organic fashion. I think that there is something here.”
• @thomasros: “I like the “democratizing of information” idea of SM.”
• @SculptorIR: “Definitely think this trend will continue, as the market wants more information about market drivers.”
• @AVGoldberg: “Intuitively believe SM trend is here to stay but contradictory 2 analysts claim of limited access thru work & not using it.”
• @meetthestreet: “I know the founders of SumZero. I wonder if they can tell if their users are using it from home? I will ask.”
• @mcjennings: “Sounds like buy side analysts do have access to these specialized sites–sumzero, val invest club, distressed debt invest club.”
• @meetthestreet: “If SumZero grows 2 B 20k or 50k buyside they will B able 2 easily move markets & IROs don’t have the same transparency as w/ SS.”

@meetthestreet: “Any thoughts on how they could monetize their offering? This will be important to their long-term viability.”

• @meetthestreet: “Now institutional investors have 2 submit 2 ideas per year 2 gain access 2 the research pool. How can SumZero make $ from this?”
• @trevorheisler: “Implementing a paid subscription service would make sense to me.”
• @mcjennings: “If they are looking for revenue model, charge IROs for access, which will be necessary in some way shape or form.”

@meethestreet: Do you think that closed research networks pose a challenge to IROs as they become more popular?

• @SculptorIR: “Yes”
• @fredmcclimans: “Agree that closed research networks pose a challenge to IROs, but also a potential captive audience at some point?”
• @fredmcclimans: “How locked out are firms/IROs from SumZero? Any access at all? Or is data totally locked for all time?”
• @meetthestreet: “SumZero confirms users & only lets buyside in. Closed network. Plus its a 1 2 many network which can’t B managed/influenced by IROs.”

@trevorheisler: “Would you consider something like Covestor to be in competition with SumZero?”

• @meetthestreet: “I don’t think so. Covestor is a retail product. If you want to invest alongside best investors, then invest in their funds.”
• @trevorheisler: “Right. Guess a better question is, should SumZero go after retail as well, with a paid subscription?”
• @fredmcclimans: “IRO could then pose as retail investor?”
• @meetthestreet: “Agreed RT @fredmcclimans: RT @trevorheisler: Should SumZero go after retail as well, w/ a paid sub <iro could then pose as retail investor?”

As usual, the hour went by quickly.  I’d love to hear your thoughts about the discussion!

Don’t forget to join us every Thursday @ 11:00 a.m. EST. In the meantime, if you have any questions you’d like to submit for an upcoming #irchat, tweet @meetthestreet or send an email to sherylj@q4websystems.com and I’ll pass it along.

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2. Equity Research Analyst Weighs in on the Social Web – podcast In early October, I had the honour of partaking in...
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