We had another great turnout and a lot of insightful questions at the end.  The team at Q4 did tweet the event, but we thought we would provide an overview of the salient points for those of you who missed it:

AGENDA

• Key trends
• Financial social networks and blogs
• Examples of companies using social media today
• How to get started
• Monitoring
• Risks

KEY TRENDS

1. In August of last year, the SEC issued new Reg FD guidance which “under certain circumstances” supported corporate websites and blogs as recognized channels of fair disclosure.
2. SEC also issued their support for shareholder forums.
3. Nielsen online report issued in March 2009, states that 67% of the global online population uses social networks and blogs – up from 58% the same time last year.
4. Study by Rivel Research Group in 2007 that states that 75% of pro investors use corporate websites weekly if not daily.
5. Slow decline in the number of sell side analysts are helping to push coverage and equity research to the social web.
6. Competition for capital is fierce – as there has been a steady decline in the number of IPOs in recent years.

All of these trends have helped to initiate a change in the market over time which has seen the increased use of the web and social media to communicate with key audiences.  Traditional channels are no longer effective on their own and companies who adopt these new channels are able to differentiate and compete more effectively for capital.

FINANCIAL SOCIAL NETWORKS AND BLOGS

Seeking Alpha – largest financial blog aggregator partnered with Yahoo!Finance; four million unique users/month (25% are institutional investors).

StockTwits – trading social network based on Twitter; has around 85,000 users, adding 500 a day; linked to whalewisdom and now available through Bloomberg.

Wikinvest – part of a new wave of contributor driven communities; finance portal; social interactive data.

EXAMPLES OF COMPANIES USING SOCIAL MEDIA TODAY

Q4 has been keeping a close eye on the use of social media and investor relations.  Part of our findings is that in addition to traditional channels of disclosure, Twitter seems to be one of the initial social networks companies are using.  For example, it is being used as a notification system linking to headlines and other content already posted on their websites.  All of the content that these companies share has been previously disclosed through RegFD channels.

A total of 12 examples of companies using Twitter were provided (note this was not an exhaustive list, but rather a sampling of a variety of sizes and sectors):

UPS; Catch The Wind; West 49; Johnson & Johnson; Dell; Ebay; Sun Microsystems; CGI Group; Shell; Chevron; Rio Tinto; Barrick Gold.

Blogs aren’t really that common, but the handful of companies using them (eBay, Sun and Dell) are doing a great job.  Facebook has not been used for IR purposes but more for marketing and HR.  Interestingly it is used the most to share pages.  Lastly, we have been monitoring LinkedIn but we haven’t seen any companies who use it as another communications channel as of yet.

SLIDESHARE AND OTHER CONTENT NETWORKS

SlideShare is a social content network that Darrell calls “the YouTube of presentations”.  There are thousands of IR presentations on SlideShare and they recently added an IR category.  Other content networks include DocStoc and Scribd.

Using content networks increases your discoverability and gives people the ability to make your content viral which means it can be shared, disseminated and republished across the web to millions of retail and institutional investors.

FIVE STEPS TO GET STARTED USING SOCIAL MEDIA

1. Good IR website and follow best practices
   a. The IR website must be viewed as the primary channel
   b. Self-publishing control allows you to be strategic
   c. Ease of use, accessibility and transparent communication
   d. “Why invest?”
2. Create compelling content (news, presentations, events)
3. Make it social and include it on your site – upload your content to social content networks and then embed your site + provide RSS feeds for News, events and presentations
4. Use Twitter like a ”notice newswire’
   a. Tweet about news, events and presentations and link to IR website
   b. Manually post updates and/or use RSS feeds to automate
   c. Start small, learn and expand conversations over time
   (only share content through Twitter that has been previously disclosed, do not use it as a primary channel for disclosure – basically anything that is on your website is ok to tweet about)
5. Monitor the web and evolve over time (free ways to monitor include google alerts and other free tools i.e. http://search.twitter.com, http://socialmention.com).

RISKS

• Disclosure of material information should follow Reg.FD guidelines
• All social channels must be treated the same as traditional channels (disclosure controls)
• Only previously disclosed information should be shared (social channels should not be used for initial disclosure of material news, only after disclosure has taken place)
• Risks are from innocent updates in social networks – travel example
• Social media policy and training are important to mitigating risk

I think it’s safe to say that anyone who is interested in social media knows a company that is using it quite effectively for marketing, advertising and PR.  What is not widely known is the number of companies who are using it and how they are using it for IR.  It is still in its infancy for use in IR and it will be interesting to see where it evolves.

Please click here  to view the presentation or video version of the webinar.

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UPCOMING WEBINAR – Learn innovative ways to integrate social media into your IR program!

Mark Thursday, July 16th in your calendar and join our free webinar to learn innovative ways to integrate social media into your IR program! Official invite to follow soon.  Or you can drop me a line sherylj@q4websystems.com to reserve your spot now!

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The weather is hot in Florida and so are the sessions here at the NIRI ’09 conference.  Yesterday I tweeted live from the “IR Emerging Issues and NIRI Advocacy” session.  The second session entitled “How the Buy and Sell Side Trade Your Stock Today”, was so hot, that I decided to put together some notes and compile for this blog.

This session was designed to help IR professionals understand what happens behind price and volume.  Here is an overview of what was said:

Moderator: Tim Quast – ModernIR

Panelists:

John Adam, Head of Issuer Service and Corporate Access – Liquidnet

Brian Barrett, Senior Trader – Franklin Templeton

Anthony Corso, Managing Director at Agency Trader (head of trading operations) – Rosenblatt Securities

Bryan Harkins, Head of Sales & Strategy for Market Center – Direct Edge

Joe Saluzzi, Partner, co-founder and co-head of equity trading – Themis Trading

Moderator: Looking back 10 years, if an institution wanted to build a position in a company how would they do it?

Anthony: Communication and transparency.  However these days there is a lot of fragmentation – for example there are a lot of new exchanges; information is difficult to aggregate; price discovery mechanisms have changed; participants have grown exponentially with mutual funds, institutional, professional investors and day traders making up the landscape.

Moderator: Brian can you give us a run-down of how you would accumulate a position of $50 million in a $5 billion market cap. company?

Brian: Not much has changed for us on the buy-side; we would accumulate in a way that would have the least impact pricing on the portfolio – try to buy or sell a position without moving a stocks price. In general, the buy-side wants to make it harder for the sell-side to see our position.  Evolution over the last five years has lead to fragmentation: that means smaller blocks being traded through high frequency traders.

Moderator: Do any of the other panelists have anything to add?

Joe: I have seen character of volume change; through high frequency trading as these traders get paid a rebate from the exchanges to do buying.

Bryan: Decimalization (all stocks moving away from fractions to trading in penny increments) made it hard for traders to discern spread capture between the bid and ask as this task was taken over by computerized trading or liquidity providers.

John:  If a company’s stock is having unusually high trading volumes, those volumes may not be indicative of “true trading”.  What I mean by that is that these high frequency traders are creating a lot of noise.  So it is hard to separate out the institutional volume.  As such, dark pools were created to eliminate the impact allowing institutions to trade more efficiently.

Moderator: Okay, what about the sell-side?  What about Goldman, Credit Suisse – are they supporting issuers? 

Joe: Committing capital to make money through market makers and specialists are gone with the move to machines.

Bryan: Fragmentation and dark pools are new, but off-exchange trades (such as those traded via dark pools) are still occurring, through advanced technology.  Computers are now dominating the market but U.S. markets are now running more efficiently.

Brian: Dark pools were initially put in place for the buy-side, although doing a trade in there doesn’t mean there is somebody in there to do business with (i.e. if I am buying a block of shares, may not be a seller).  So there has been a recognition that they needed to be opened up to the sell-side.

Question from audience: How much transparency is there for dark pools?  Do you have to report a dark pool trade?

Brian: Yes – in the U.S. all of the trades aggregate and print through FINRA as soon as the trade is executed.  Conversely in Canada, dark pool trades do not print on the TSX.  Volatility has also lead to fragmentation and backing away from doing large blocks of shares.  Personally, I still look for liquidity and price points.  For example, when I start building a position in a company, I do a few things:

1. Quantitative Analysis – trade cost analysis: historical spread between bid and ask and how much the opportunity will cost?  Should we act now or wait and see?
2. Liquidity – not looking to make a footprint (transparency as well, but too much will trigger attention to volume of trading)

Moderator: So essentially due to high-tech evolution, there is no transparency of who is trading a stock?

John: Yes high frequency trading makes it hard to figure out what your investors are doing in the market.   So just because there is heavy volume doesn’t mean there is an institutional investor acquiring or selling off a large position.

Moderator:  Okay, let’s take some more questions from the floor…

Question1: At the end of the day my stock usually stabilizes, then right before the close there is a surge that seems to drive the price down – what is causing this?

Answer1: (collaboration from all panelists): well at the end of the day, the volume weighted average price gets calculated.  But based on our prior discussion you could surmise it is due to the high frequency trading coming in to through things off kilter.

Question2: So if IRO’s can’t determine who is trading their stock, how would we determine effectiveness of a roadshow?

Answer2: John: know your holders; since there has been a drop in sell-side coverage, should interact more with buy-side to gain sentiment.

Anthony: I actually have to disagree with John on this one – buy-side may not divulge what they are doing in market.  Should actually engage a good service provider to tell you where your stock is trading.

Question3: How would you judge the quality of data from surveillance providers that IRO’s/companies are paying for?

Answer3: John: Market is more difficult to understand true picture; again very fragmented.

Question4: What do you think of short-selling rule from Washington?

Answer4: Joe: well I disagree with it as the lobbyists there represent the exchanges and the exchanges are paying the rebates to the high frequency traders.

Brian: Buy-side and sell-side are going to start to consolidate to stop fragmentation.

John: There is a place for short-selling:

1. Part of an efficient marketplace
2. Rife in market to enable abuse

Although a lot of PM’s don’t want to loan out stock anymore especially in today’s market climate.

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Read the full release! 

We officially launched our Summer ’09 release from the NIRI National Conference in FL, which introduces Social Media and XBRL capabilities to IR websites.  This latest release offers different ways for investors to find, subscribe and share content through social networks.

Q4’s web platform continuously evolves with market and regulatory trends that keep the IR website on the leading edge of companies’ investor communications.  Q4’s latest IR website products create viral IR content, which means they can be shared, disseminated and republished across the web to millions of retail and institutional investors. 

Customers can now:

• Embed and distribute presentations, videos and documents through SlideShare, YouTube and Docstoc,
• Automatically update Twitter, LinkedIn and Facebook with news presentations and events, and
• Aggregate all social activities on the IR website with inbound RSS feeds.

We also announced from the NIRI National Conference, that our Q4 web platform now delivers a highly accurate real-time rendering of XBRL-tagged SEC filings. 

Read the full release! 

This new product enables users to view XBRL-formatted financial statements in an easy to read display on IR websites while helping public companies meet the new SEC XBRL regulations which require them to post financial statements in interactive data formats. 

To respond to this mandate Q4 now offers US-based filers:

•  XBRL financials with real-time rendering on your website – once your XBRL filing is accepted by the SEC, within minutes your website is updated with the complete filing displayed in HTML,
• Multiple report formats for enhanced financial analysis and reporting by investors, analysts and the financial media, and
• Ability to view and download XBRL reports, or share embed codes through social networks. 

If you’re interested in learning more contact us today and we’ll setup a live product demo.

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• Find out why social media is now a key aspect of investor relations in lowering capital costs, why it doesn’t need to be difficult and how to responsibly get involved.

• Learn about XBRL filings that can be viewed in an easy to ready display on your website.

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

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Since the SEC announced its recognition of corporate blogs as public disclosure in July of last year, social media has been used quite effectively by PR, marketing, and advertising professionals.  However IR practitioners are still pondering the risks and opportunities outlined in the recent SEC guidelines.

There are many things to consider for integrating blogs and other social networks into an IR program – such as disclosure and adhering to legal compliance. This is quite a dilemma as the adoption of social media has exploded and continues to be a medium of choice for millions of individuals hungry for instant information.

THE SEC FACTOR

Add to this, the ambiguous information initially issued by the SEC in which it states that “…company disclosure should be more readily available to investors in a variety of locations and formats to facilitate investor access to that information”, while their report “Guidance on the use of Company Websites” issued last August outlines the boundaries for sharing information as well as holding companies and their employees liable for the information that they post on blogs, networks, communities, and discussion forums.

No matter what, if a public company wants to use the social media outlets available, the SEC guidelines cannot be ignored.  As such, internal policies must be adapted and enforced to minimize the risk of overzealous employees posting status updates thereby triggering an SEC investigation and/or a shareholder revolt.

BROADENING THE COMMUNICATION CHANNEL

Mainstream IR programs target analysts, investors, and other stakeholders through a combination of strategic marketing activities and the ongoing distribution of material information using accepted channels. Now that social programs are being considered (and slowly added) to IR programs, IRO’s must decide what works for them – in particular how and when to engage in social media.

In a previous post I cited some companies who have had success in integrating social media tools into their IR websites to enable communication of both material and non-material information.  For example, Sun Microsystems developed an “Official Investor Communications Portal” which was created as a central source of material information and allows investors to subscribe to SEC filings and the CEO’s blog postings.  Whereas, Microvision implemented a multi-author blog for non-material information entitled “The Displayground” which links to media articles, product demonstrations, and customer testimonials.

Both of these companies chose ways that worked for them in how and when they engaged in communication with investors.  All the while being compliant with Reg. FD that states that material information distributed through social media be consistent in timing and language with conventional press releases.

SIFTING THROUGH THE GUIDELINES

In spite of the reach provided by social networks, few companies are using them for fear of being in violation of federal securities laws.  Fair enough, but the SEC states “it’s the responsibility of any community-focused organization to use all tools and channels in a way that extends and supplements each other.”

Consider the recent article in the Wall Street Journal in which they tell about how eBay launched a corporate blog which included updates about conferences, quarterly earnings calls and other topics by the company’s Chief blogger Richard Brewer-Hay.  Recently, he was required to include regulatory disclaimers with certain posts.

With the eBay case in mind, it is highly recommended that you carefully read the guidelines.  But don’t expect any explicit direction on what you can and cannot do or a step-by-step outline that tells you how to integrate social media into your IR program.

You just have to take it for what is worth – some starting points for implementing social media in the most compliant way, while enhancing your company’s communications platform. For example, companies will need to consider whether and when postings on their Web sites, communities, or networks are “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.”

MODELS TO LIVE BY

When it comes to using social media and tying it in with IR, a lot of companies don’t want to blaze the trail.  Instead, most are content in waiting by the sidelines to see what others are doing to see where the dust settles.   That is unfortunate as social media is here to stay whether you choose to be an early adopter or want to play catch up once it really explodes.

Some large companies such as Johnson & Johnson and EMC Corp have been already been using Twitter to report annual meeting minutes and extend the reach for company news, and Dell has an investor relations blog dedicated to providing transparency and insight related to corporate activity, technology, and products.

Intel has also adopted the use of social media and advises companies to “Start small, do the due diligence and have patience… and be fine with being a change-agent for the following year or two.”

POINTS FOR CONSIDERATION/LEARNING BY EXAMPLE

Brian’s post boils down some of the salient points (from the SEC) to consider:

- Companies are more likely covered under the Fair Disclosure act if they publish information equally and accurately through a variety of traditional and digital passages.

- Companies should create a hub that documents all available mediums to receive information as it’s made public such as:

• Listing all press release services you employ
• Providing a directory of relevant blogs with URLs and RSS Feeds;
• Listing Twitter, FriendFeed, FaceBook or other relevant social network profiles;
• Sharing podcast links and presences on other audio networks such as iTunes;
• Embedding electronic documents and link back to host accounts such as DocStoc and Scribd; and
• Linking to a traditional or social media newsroom if this isn’t already the directory where this  information resides.

- News and intelligence should not reside in any one place. Concurrently, new channels should not suddenly appear without proper attention and disclosure. The SEC advises the practice of writing and distributing Notice and Access press releases to alert stakeholders to upcoming material announcements and pointing them to the place of distribution.

As mentioned earlier, social media is here to stay.  There are many reasons why companies should adopt it, although internal circumstances and other variables need to be properly assessed before moving forward.  As more companies take the leap and adopt social media into their IR program, the SEC guidelines can be refined and tailored to evolve with their experiences.

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