The audience spanned many countries such as China, Hong Kong, Russia, Germany, UK, Switzerland, The Netherlands, Brazil, South Africa and many more.  Knowing this I made sure that I included relevant information on what countries are using social media for investor relations.  I also thought the audience would appreciate some background on sector use as well.

I also wanted to adequately setup how online communications has evolved over the past few years and been impacted particularly by the increased use of social media to reach and engage with key audiences.  Here are some of the key points:

• Companies are adapting to changes in online communications by integrating their IR website and social media channels.
• Investors are using social media which is evidenced by research that supports this such as Rivel research that found 49% read financial blogs weekly and 63% agree that social media will increase in importance over the next year.
• Further evidence of whether investors are using social media is the emergence and increased use of popular financial blogs such as StockTwits and Seeking Alpha.
• Financial blogs are the ‘New Information FoodChain’ and investors are consuming blog posts being written about companies and sharing corporate assets such as presentations and quarterly releases.

I then walked the group through examples of what channels are being used to share investor-related material and the specific information they are sharing. You can see the examples by viewing the presentation below:

This was the first time I spoke to such a global group and to be honest I expected a lot of questions.  That said, I did provide a lot of information to take in and our research has found slower adoption of social media in countries outside of North America.

However, the group seemed to understand that they needed to stay apprised of what is happening with online communications, as I did get a question or two around the strategy behind using specific channels first such as Twitter.  Another asked if certain channels should be used to target retail or institutional investors.  As opposed to a typical discussion around ‘why’ companies are using social media for investor relations or concerns over regulatory issues.

Please let me know if you have any questions!

Related posts:

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Based on these findings, on June 14, 2011 Q4 sponsored a Lunch ‘n’ Learn session at the NIRI Annual Conference which sought to answer this question:

‘Is now the time for all companies to adopt social media disclosure and move beyond compliance to a more efficient and effective model of disclosure?’

During the session, Darrell Heaps, Q4’s CEO moderated and asked pointed questions that prompted insightful input from a great panel including: Robert Williams, VP IR at Dell who discussed their success using social media for IR, including Twitter, StockTwits, SlideShare and YouTube as part of their quarterly reporting process.  We also had Chris Bullock, VP Corporate Solutions at StockTwits who answered why their social investing forum is growing so fast and his thoughts on some driving forces behind the increased use of social networks and blogging by the investment community.  Lastly, Dominic Jones of IR Web Report talked about his research comparing the reach of PR wires vs. social media disclosure.

The audio file from the session has been synched to the slide presentation below (a special thanks to the NIRI 2011 Annual Conference organizers for granting us permission for use of the file on our blog):

The Q&A session was also recorded and questions from the audience are fielded after the panel discussion ends.

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2. NIRI Twin Cities – IR in the Age of Social Media Wrap-up Earlier this week, Darrell Heaps, Q4’s Co-Founder and CEO participated...
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We had a lot people visit our booth and those who registered for a demo were automatically entered in our draw for a chance to win an iPad or 1 of 3 iPod nanos.  Congratulation to all of the lucky winners:

iPad

Trista Muse, Manager Investor Relations and Financial Reporting, Tupperware Brands (as shown in the picture on the right with Darrell Heaps and myself to her right and Karen Adams, Client Relations Director to her left).

iPods

Tim Girgenti, Chief Marketing Officer, PROS, Suzanne Shepherd, Manager Investor Relations, Assurant and

Joanne Freiberger, Vice President & Treasurer, Masonite (as shown in the picture to the right with our VP Sales, Catherine Crofton)

On Tuesday June 14, we also sponsored a well-attended Lunch ‘n’ Learn session: ‘Social Media Disclosure – Is Now The Time?’ Darrell Heaps our CEO here at Q4 moderated an informative discussion with some of the web’s most prolific thought leaders on social media and investor relations, including Dominic Jones of IR Web Report, Robert Williams, VP of IR at Dell and Chris Bullock, VP Corporate Solutions at StockTwits.

You can view the presentation below:

The Lunch ‘n’ Learn was recorded and once the archive is ready, we’ll be providing a link to the audio as well as writing a blog post that outlines all of the insightful information shared by our panelists early next week, so stay tuned!

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There is a great lineup of sessions, but you won’t want to miss ‘Social Media Disclosure – Is Now the Time?’ – a Q4-sponsored Lunch ‘n’ Learn on Tuesday, June 14th at 12:15 p.m. in the Ritz Ballroom 4-6 on the lower level.

Q4’s Co-Founder & CEO Darrell Heaps will be moderating a panel of the web’s most prolific thought leaders on social media and investor relations who will ponder the question: ‘Is now the time for all companies to adopt social media disclosure and move beyond compliance to a more efficient and effective model of disclosure?’ The panelists include Chris Bullock, VP Corporate Solutions at StockTwits, Dominic Jones, Founder of IR Web Report and Robert Williams, Vice President IR at Dell.

For those of you who can’t make it, we will be providing regular updates on Twitter, Facebook and posting on our blog.

Whether you can visit our booth in person or register for a demo here: http://www.q4blog.com/about/contact-us/ you’ll be eligible to win an iPod Nano or iPad until the conference ends on Wednesday June 15 @ 5:30 p.m. EDT.

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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.

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The program served as a boot camp for new IROs to familiarize them with all things IR: corporate disclosure issues and best practices; corporate governance; investor targeting & IR marketing; media & communications; understanding equity markets; planning and executing analyst days and non-deal road shows; understanding sell-side and buy-side analysts; financial analysis & best practices in using financial info to tell your story; global IR, and developing an IR plan. The program was loaded with great information. Attendees ranged from those new to investor relations to more seasoned IROs interested in brushing up and learning about new best practices.

This same program is held twice annually – September in Boston and January in Santa Monica. I would highly recommend it.

Although I found a great deal of the content interesting, I particularly liked the sessions that addressed how to deal with sell-side and buy-side analysts.  So I thought I’d focus a couple of blog posts on the topic – with this first one dedicated to the sell-side.

Understanding the Work of Analysts: The Sell Side

This session was presented by larger than life Michael Pachter, Managing Director, Equity Research at Wedbush Securities Inc. – the most quoted sell-side analyst on Wall Street. A highly engaging speaker, Michael provided a frank perspective on the role of sell-side analysts, why IROs should care and how they should interact with them.

The function of the sell-side analyst is to help investors make decisions about investments.  The sell-side analyst’s role encompasses the following:

• Making investment recommendations
• Providing price targets
• Supplying research notes
• Company interaction
• Buy-side interaction
• Exposing their recommendations/thoughts through the media

Making Investment Recommendations

Michael’s take is that there are really only two recommendations: Buy or Sell, and that a Hold position is the refuge of an analyst that lacks conviction. Analysts provide recommendations/ratings as an indication of where the sell-side thinks the stock is headed and a ‘Hold’ means that the analyst has no strong opinion.

In Michael’s opinion, ratings given ‘after the fact’ (e.g. following earnings calls) are a punishment. Those given ‘before the fact’ are a gamble and obviously analysts that take this approach leave themselves open to being wrong – and some analysts don’t want to risk this.

The analyst role is not about being a cheerleader for your stock – it’s about being right.  IRO’s should seek out analysts that really care about being right and then help them be right by facilitating an understanding of the company, business, leadership etc.

Providing Price Targets

Michael feels that price targets (an indicator of an analyst’s learnings) are usually worthless and widely ignored, largely because not enough effort or conviction (by the analyst) stands behind the ratings:

• The wimp’s refuge is to maintain a rating and adjust the price target
• The lazy man maintains the price target and does not adjust the rating

Supplying Research Notes

Research notes are generally required before and after earnings. They can also be ‘Industry Updates’ centered on a specific event or a regular interval (such as monthly). Research can consist of ‘Think Pieces’ that focus on the specific industry or initiations (the first research piece written by the analyst, beginning or initiating coverage of the stock.) Many analysts do a couple of reports per quarter – a highly engaged analyst is going to issue many more.  Michael releases several reports per month.

(When an investor wants to talk to a sell-side analyst, you have the power to direct the investor to the analyst that really ‘gets’ your company.)

Company Interaction

Michael has minimal interaction with the companies he covers i.e. he never calls management. They occasionally call him, before he forms and communicates an opinion on something.

Many analysts call management frequently – often seeking approval or ‘inside’ information.

Buy-side Interaction

Buy-side analysts often interact with the sell-side and read their research reports. The buy-side will form their own opinions but may value the research/opinions of specific sell-side analysts – this is turn may impact the compensation of sell-side analysts.

There are two ways that analysts are compensated:

• Voting from institutional clients
• Trading volume

If your analysts get paid based on trading volume, they are more highly incented to create volatility for your stock, which isn’t good for your company. It’s important to understand how your analysts are being compensated – ask them.

Media Exposure

Analysts communicate with the media primarily to establish credibility for their research/recommendations. Obviously this exposure can either help or hurt the covered company, so its management needs to pay attention to the media and attempt damage control where required.

Call the analyst and ask, “Why did you think that?” Try to understand their opinions and help them better understand your company, the situation etc. Try to get to them before they form their next opinion.

Conclusion

IROs can use the sell-side to their company’s advantage. By treating analysts well and being responsive/helpful you can better control analysts. By ignoring the analyst or enflaming them, you can provoke an analyst and worsen the situation.

You should work with your analysts to facilitate a better understanding of your company. And you should foster relationships, for example, go to analyst conferences if you can – rotate them into your schedule so you get out to see everyone who’s covering you over time. (Analysts understand that many of their conferences take place at the same time.)

And finally you need to accept what you cannot change; you can’t change arrogance but you might be able to change ignorance.

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If you are attending we are hosting the Welcome Reception on Sunday, January 9 from 6:00-7:00 p.m. right next to our tabletop exhibit – be sure to stop by and enjoy a refreshment on us.

Our Sales team will be available to answer any questions about our IR website best practices and investors tools as well as the numerous ways the Q4 platform integrates your social media efforts with the corporate website.

We look forward to seeing you there!

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Whatever the reasons, shareholder/board interaction poses challenges for IR professionals – such as exposing the company to legal liability through information inadvertently divulged which highlights the fact that boards need to be re-educated on their company’s disclosure policies.  Even more importantly, the aforementioned may underscore that a formal board communication policy needs to be put in place.

While shareholder/board interaction poses challenges for IROs, it also provides opportunities to take ownership and control over how the board interacts with shareholders.

What follows are some of ideas from the “How to Icahn-Proof Your Board” session, which discussed how IROs can strengthen the BOD’s role as an active, informed and engaged fiduciary to shareholders.

BACK TO THE BASICS
Formal communication policies should be established – having something in writing alone is not effective by itself. Directors should be trained on Reg FD and the IRO should be the one to do so.  The IRO should also keep the policy current and proactively reach out to the board to ensure they completely understand the document. Ultimately, the IRO should become the “go-to” person to address any questions.

Outline specific procedures for handling investor inquiries – if a board member is contacted by a shareholder, have them take down the contact information nature of the inquiry and immediately inform IR.  That way, a discussion can be generated on whether this person has called the company before.  It also gives the company (i.e. IRO) time to gather information about this shareholder.  It may well turn out that this person is a known activist investor, who is testing the company to see if they get a consistent answer from the IRO, management and the board.

APPRISED OF KEY ISSUES
Oftentimes, directors sit on several different boards – which can make it difficult for them to stay on top of all key issues for each of the companies they serve.  One way IROs can help, is to put together a comprehensive information package.  At the very minimum, the IRO should provide an overview of the company’s shareholder base, how it’s changed, the questions being asked and any concerns that have come to light.  When I was an IRO, I did a quarterly update report which was disseminated to the board.  If there were any questions, they knew they could call me for clarification.

However, as mentioned, some shareholders may ask several different people within the company the same question to see if they get a consistent answer.  Sometimes, this may happen around a particular company event such as the annual meeting.  In light of this, IROs should also take steps to ensure that their board is appropriately updated on the proxy issues.

Other events that may promote a call from an activist investor could include poor stock performance, a change in corporate strategy, executive compensation and poor performance compared to your peers.  In my opinion, IROs should stay on top of (and keep the board apprised of) any changes to the company’s strategy and executive compensation.  As stock performance (in general and in relation to your peers) is not predictable and various factors can influence trading, it is not advisable to bombard your board or management with updates every few hours.  You can opt to inform them of any sharp declines/trends in a timely manner and reserve general commentary regarding the stock’s performance in your quarterly report.

Lastly, in addition to key issues, the board should know what the company’s general business objectives and strategies are and what information is in the public domain and available for them to discuss publicly.

INCREASE ROLE & MAXIMIZE BOARD EFFECTIVENESS
The panel also discussed some tactics IROs can use to help their board be aptly prepared when speaking with shareholders.  For example, having a member of the board attend analyst meetings will help them get in tune with the kind of questions the company is fielding.  Even further, it may be effective for the board to answer some of the questions at these meetings.  Executive compensation is a particular area where they could provide valuable insight – as executive compensation is set by the board – and their response may seem more credible and well-informed than that of management.

Further, as IROs become more involved with training the board and taking the lead on implementing and writing the board’s communication policy, they will get a sense of which board members are good communicators.  This is beneficial, as these particular members can be used to speak to shareholders in advance of proxy votes for example.

NEW COMMUNICATION CHANNELS
When shareholders reach out to the board, oftentimes they just want to be more engaged in dialogue with the company.  The increased use of social media has made it easier for shareholders to contact the company in general.  IROs should take note of what board members are using which social channels.  This should then be incorporated into the formal communications policy so there is no room for misinterpretation on how to deal with shareholders using social networks.

By taking a proactive stance in educating your board about good disclosure practices and taking the lead on training, IROs have an opportunity to control how their board interacts with shareholders.  This is beneficial on many fronts: it can alleviate any potential compliance issues for the company by having streamlined communication policies which specifically outline what the board can and cannot say; and it establishes the IRO as a credible source and go-to person in instances where there is confusion about how the board should deal with shareholders.

It doesn’t matter whether you’re dealing with retail or institutional shareholders.  Taking the time to ensure that your board is responsive and well prepared to handle investor inquiries has many benefits to you as the IRO and ultimately the company.

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We had a lot people visit our booth and those who registered for a demo were automatically entered in our draw for a chance to win an iPad or 1 of 3 iPod nanos.  Congratulation to all of the lucky winners:

iPad
Mary Beth Kissane, Walek & Associates

iPods
Wendy Kelley, Leap Wireless International
Alexia Taxiarchos, Hasbro
Albert White, The Cooper Companies, Inc.

There were a lot of great sessions and we hope you found our Twitter updates useful.  As there were so many sessions to choose from, we didn’t have much time to blog from the conference.  So over the next little while, we’ll be catching up – so stay tuned!

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There is a great lineup of sessions, but you won’t want to miss “Integrating Social Media into Your IR Program” on Monday, June 7th at 4:15 p.m.  Q4’s Co-Founder & CEO Darrell Heaps along with Laura Graves, Director Global IR, Cisco Systems and Robert Williams, Director IR, Dell – both seasoned IROs with extensive experience using social media as part of their IR programs, will provide insights to help IROs understand the role social media can play in their organizations, maneuver around potential pitfalls and learn the tips and tricks to create a solid, easy-to-manage online investor program.

For those of you who can’t make it, we will be providing regular updates on Twitter, Facebook and posting on our blog.

Register for a demo and win an iPod Nano or iPad!

Whether you are attending or not, if you register for a demo you’ll automatically be entered in a draw for a chance to win an iPad or 1 of 3 iPod nanos!

Related posts:

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2. Q4 Is Attending the NIRI Conference The Q4 team is off to the NIRI National Conference...
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