Last year Slideshare launched a new category called ‘Investor Relations’.  Since the launch, public companies began posting a wide range of investor focused presentations, including quarterly reports, analyst presentations and operational updates.

Many of our clients publish their investor slides on SlideShare and embed them on their websites.  The benefit for these companies has been two fold, the first being roughly a 10X increase in the amount of views on these presentations vs. simply posting a PDF to their website.   Secondly, bloggers embed these presentations into their posts, which has helped our clients influence the downstream publishing of their news.

A very interesting trend has emerged with companies using Slideshare to announce acquisitions.  Most recently, HP’s acquisition of Palm and Symantec’s PGP and GuardianEdge.  In each of these examples the slides have been shared many times from the Slideshare site and embedded on numerous blogs.  Symantic tweeted about their acquisition slides on April 29th and currently has over 1200 views and has been embedded on three sites. Similarly, HP tweeted about their slides on April 28th and the presentation now has over 9000 views and has been embedded on 28 sites.

When a public company announces an acquisition it’s critical to provide context as to why the deal is a positive one. In both the HP and Symantec examples they have done a very good job at using Slideshare to support their other efforts.

In each case, they include a disclaimer slide at the beginning (compliance requirement) and then go into detail explaining the virtues of the deal using a combination of text slides and visual explanations of the benefits of the acquisition.

As we can see by the views and the number of embeds, HP and Symantec have provided a useful asset to journalists and bloggers to include the presentation in their posts, which in turn is read by investors.  A couple examples:

http://mashable.com/2010/04/28/hp-palm-analysis-webos/
http://www.palminfocenter.com/news/10037/hp-a-transformational-deal-for-the-mobile-market/
http://www.securityweek.com/content/symantec-acquire-pgp-corporation-and-guardianedge

HP and Symantec are just two of the most recent companies that understand that packaging their announcements in a visual and sharable format (like Slideshare) is an important method in helping shape market and investor perceptions.

I’m sure we’re going to see more of this in the near future.

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Q4 Web Systems and MUNCmedia have formed a strategic alliance that gives issuers the ability to deliver their investor relations message directly to over 90 million active investors.

The video below provides an overview of MUNC’s Retail investor communications network:

Engage Investors WHILE they are online looking at your peers from MUNCmedia on Vimeo.

To formally introduce this alliance, Q4 invites you to join us on Wednesday, May 5th from 4:00 – 5:00 p.m. EST to hear MUNCmedia’s Frank Lane, VP Client Services as he discusses the important role of a focused – targeted – news distribution campaign to an engaged buying retail investor audience.

MUNCmedia helps hundreds of companies find liquidity by targeting their messages directly to an active and interested financial audience at the exact moment they are online researching current investments and looking for new opportunities to expand their portfolio.

Please register here if you would like to learn how direct outreach to active retail investors has helped companies:

• Improve liquidity to ensure proper cash flow levels for continued operations and company growth
• Increase brand loyalty by increasing the probability of reaching potential new customers
• Stabilize volatile trading in their stock
• Reach an attentive audience of new active investors outside of the “institutional” channel
• Capture interested investor information in real-time

Register today for this free webinar and learn how pushing your news directly in front of engaged individual investors – consistently and frequently will increase investor awareness of your company and bring maximum impact to your company’s messaging.

If you have any questions that you’d like us to address please leave a comment below and we’ll be sure to answer during the webinar.

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Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Google is able to do this based on the SEC guidance from Aug 2008 regarding the use of websites for disclosure. This guidance states that under certain circumstances, companies can rely on their websites and blogs to meet public disclosure requirements under Reg FD.

As we all remember all too well, shortly after this regulatory change the market collapsed and this new channel quickly faded into the background, while most companies fought to survive the worst recession many of us have ever seen.

However, with 2009 behind us and the recovery underway, the first quarter of 2010 has seen the most activity on the web disclosure front yet, with a number of companies testing out new tactics. Let’s take a look at some examples.

BGC Partners (Nasdaq: BGCP)

BGC Partners, Inc. (BGCP 6.51, 0.00, 0.00%) , a leading global intermediary to the wholesale financial markets, today announced that it plans to issue an advisory release after the close of market on Wednesday, May 5, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the “Investor Relations” section of http://www.bgcpartners.com.

Expedia (Nasdaq:EXPE)

Expedia, Inc. (Nasdaq: EXPE) today announced fourth quarter and full year 2009 results through a press release that is available now at http://www.expediainc.com/ir.

From Q4 Earnings Call – Seeking Alpha Transcript “You may also have noticed we have changed the way we are distributing our earnings release. Rather than put the release out over the newswire, we are pointing people to our IR site where they can pull down the PDF version. You should expect us to continue this practice going forward.”

Google (Nasdaq:GOOG)

MOUNTAIN VIEW, CA–(Marketwire – April 15, 2010) -   Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Marathon Oil (NYSE: MRO)

HOUSTON, April 6, 2010 – Marathon Oil Corporation (NYSE: MRO) announced that the Company will begin issuing advisory news releases notifying investors and other interested parties when new and material information is available on its website, in compliance with the U.S. Securities and Exchange Commission’s guidance regarding “notice-and-access” news releases. With this change the issuance of full-text financial news releases via a wire service will be discontinued.

Reis (Nasdaq: REIS)

Reis, Inc. (Nasdaq:REIS), a leading provider of commercial real estate market information and analytical tools, announced that it plans to issue an advisory release before the opening of The Nasdaq Stock Market on Monday, March 15, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the Investor Relations portion of Reis’s website (http://www.reis.com).

Tellabs (Nasdaq: TLAB)

NAPERVILLE, Ill., Jan. 26 /PRNewswire-FirstCall/ — Tellabs is announcing its fourth-quarter and year-end 2009 results and new quarterly dividend. A complete version of the news release is available at http://www.tellabs.com/news/2010/4q09.pdf.

We are certainly still in the early stages of web disclosure, however it is interesting to note that only Google has announced the intention to use its website exclusively and to no longer use advisory releases (aka “notice and access” press releases) . For the rest, each has moved to a shorter release with a link to their IR website for the details.

As expected we have heard from both sides of this debate, pro web disclosure and pro wire disclosure. Here are two of the popular posts:

Google moves to web disclosure for Reg. FD
http://www.irwebreport.com/daily/2010/04/16/google-moves-to-web-disclosure-for-reg-fd/

Is Google’s Latest Move Evil?
http://www.fool.com/investing/high-growth/2010/04/19/is-googles-latest-move-evil.aspx

In addition to the above posts I’ve been a part of two great discussions on the topic on LinkedIn. Both in the NIRI group (you have to be a member of NIRI to view) and also in the IR 2.0 group.  Each provides a good balance of opinion on the pros and cons of web disclosure.

In general, I think that only large companies with a significant following are a good fit for web disclosure. Companies like Google and other well known brands, have the ability to use their websites as a recognized channel of disclosure and can instruct the market to use their site and all available alert options (email, RSS, social) to keep abreast of news.

For most companies, either continuing to use a full-text press release alongside with posting it on their website or using an advisory/notice and access release are the two remaining options.

I am not against using press releases. In fact here at Q4, we use press releases when announcing big news.  I can easily say it is not a silver bullet, but used in conjunction with web and social channels, press releases can help increase awareness about your company.

Having said that, I think that the hybrid approach of continuing to use the wire to publish advisory releases that link to the IR website for detail(s) is where the market is headed.  The examples previously mentioned are an early indication that this approach may be the one most widely adopted going forward.

Using advisory releases gives companies the additional reach that a newswire can offer, while keeping costs down, and directing investors to the website for the details.  Linking to the website provides many search engine benefits for the company and gives them an opportunity to build direct relationships through subscription options like email, RSS and social channels.

It’s important to note, if you are going to direct investors to your site, you need to make sure it is ready for them.  IR website best practices, enterprise level hosting and accessibility + mobile access are all important areas to focus on to ensure that you can leverage the increased traffic to your site.

The benefits of using your IR website in this matter include:

• Improved disclosure & transparency – linking to your website allows you to share Excel files and formatted documents, which give investors more context and downloadable assets than reading the news on a third-party website.
• Improved efficiency –  putting the full-text release on the website allows you to manage only one version of the release and related financial tables , no longer will you have to juggle multiple versions with the newswire
• Increased investor traffic – linking to your website as a recognized disclosure channel will increase the number of investors to your website and allow you to provide more context  around your business
• Increased direct subscriptions and followers - with more investors visiting the website, there is an increased opportunity for them to register for email alerts, RSS and social updates –allowing you to build relationships directly.
• Reduced costs over time – moving to advisory releases reduces costs simply because these releases are shorter and commercial wires charge by the word.

We’re going to keep track of this trend and will report back in Q2.  If you know of other companies using these tactics, please include in the comments or share with us on Twitter or LinkedIn.

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The founders of Agoracom are set to appear in front of the OSC at the end of April, where we assume we will all hear more details of the allegations and the defense of Agoracom. I, like many others, await more details before passing judgment on what really happened and to what degree fraud was committed (if at all).

In light of this recent situation, I wanted to take this opportunity to talk about the problems with message boards and the importance of transparency and trust and being successful online.

Similar to Yahoo!Finance message boards, Agoracom uses alias for all members. As you can see from the screenshot below, there no real names listed and there is no further information available on the site on who these people are.

The BIG problem here is the complete lack of transparency. Who are these people? What are their backgrounds, their day jobs, etc? In their current format message boards like this can’t be trusted if anyone can create an alias and “pretend” to be an investor.

The reason why social media works, is because of the trust that is built up over time between real people. This would never work if everyone used an alias and you didn’t know who they were. The best practice across all social media channels is to use your full name in your profile and/or links to further details about yourself.

What would Facebook be like if everyone used an alias? It only works because it’s real people connecting with real people. A great example of this can be seen in some of the Facebook pages used by companies to connect with investors. See TVI’s Facebook page (disclosure: TVI is a Q4 client)

Seeking Alpha is a great example of transparency, a part of their success has come from how transparent the community is, people connecting with people.

On Twitter there are many users that have an alias for the account name, however most people provide their real name within their profile. There are certainly many automated accounts and many fake accounts, however the people with the most influence and benefit to the company are those that are real people being transparent. I know in my own work with social media, being transparent and authentic is absolutely critical to connecting with people online and building trust.

Sure there are Twitter accounts today that are based on aliases and stock promoters are using them to create “fake awareness”. I hope the actions from the OSC sets a precedence that other regulators can use as an example to control this type of fraud.

Social media is about connecting real people. This is true across every line of business using social media, including marketing, public relations and investor relations. Transparency and trust are required to be successful.

I don’t think that these allegations apply to any PR or IR firm tweeting on behalf of a client, as tweeting for a client is very different than pretending to be an investor:

• When posting for a client it is being done under the company account and is being used to assist in the distribution of content and to build a following through engagement with stakeholders. There is nothing underhanded in this approach and this is within regulations and ethics.

• If an IR firm creates an alias account and then pretends to be an investor engaging in discussions with the company and other investors then this is simply lying and is not ethical in any way. Perhaps a case can be made that this is not securities fraud, but it certainly is business fraud and should not be tolerated by companies, regulators or investors.

On a related note, in 2007 Whole Foods’ CEO John Mackey was caught posting messages on Yahoo! Under the name “rahodeb”:

Investigations were launched by the FTC (to block an acquisition) and by the SEC. Ultimately both agencies did not pursue the issue and Mr. Mackey got off. In his own defense Mackey said that he had the right to post under an alias because everyone else did on the message board. Mackey also said that he thought the posts of one man under an alias would never be able to move to the stock and that this was not his intention. However, with posts such as this one posted in Jan 2005, it’s hard to believe his intentions were ethical:

“13 years from now Whole Foods will be an $800+ stock before splits”
John Mackay, CEO of Whole Foods posting as “Rahodeb”.

There are other stories about the CEO of overstock.com using aliases on message boards to spread misinformation, attack his critics and even leak information.

Neither the CEO of Whole Foods or Overstock.com was charged by the SEC for these types of postings. However, it seems the SEC wasn’t doing much enforcement during this period (too many stories to mention here) and I have to wonder if these events happened today would the current SEC react in the same way? Their recent increased judgments related to Reg FD seem to suggest they would react differently.

If the OSC needs to set the precedent that companies and by extension IR agencies can’t create fake investor accounts, then I think this is good for all companies and investors.

As I said early in this post, we’ll all know much more about Agoracom and OSC at the end of this month. Until then I reiterate, I am waiting to get all the details before passing judgment.

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The session only runs an hour so Dan asks one question every 15 minutes which gives us time for usually about three to four questions.  He does a fantastic job of stimulating the conversation by asking thought provoking questions which creates a lot of debate among the experienced IR professionals who participate each week.

In conjunction with findings released in December 2009 from Rivel Research Group on the premium the buy-side in the U.S. place on “superb” versus “poor” investor relations (IR), Dan started this particular #irchat session by asking “What do you think about Rivel Research’s buy-side survey which suggests that the valuation differential between good IR and bad IR is 35%?”

RIVEL’S FINDINGS

• Surveyed 250 members of the US buy-side on how they make investment decisions were initially asked “Does good IR impact a company’s valuation?”  Of the respondents, 74% stated that yes, good IR makes a difference. 
• The respondents were then asked how much as a percentage of a company’s valuation does superb IR contribute?  The median response was 10% for good with a 25% discount attributed to poor IR with Superb IR impacting a company’s valuation by a total of 35%.

This question stirred up quite a debate, especially since no one had access to the methodology or a definition of what constitutes “good” vs “bad” IR.  So the responses were based on the information we had.  What follows is an overview of how the chat unfolded around the question:

• The high number of people surveyed (250) gives this finding some credibility and can be considered statistically relevant: 
  - Although a few refuted the study as it was only based on what the buy-side constitutes as good vs. bad (again not sure how these parameters were defined) so the findings were viewed as more conversational/anecdotal as opposed to scientific.
  - However, one thought that it is okay to gather anecdotal comments about how IR is measured, but when speaking about ROI, specific inputs should be defined.
  - Another wanted to know what the breakout of the 35% impact on a company’s valuation among buy-side based on investment style i.e. value, growth, momentum, hedge fund and rapid traders.

• In spite of whether it was felt the study was credible or not, some had mixed feelings about the findings and how IR should use this information:
  - One stated that ascribing more of a discount to bad IR makes senses as it is similar to how word of mouth can impact a reputation (think of bad experience regarding service related issues i.e. Rogers, Bell) and in this case if a portfolio manager has a negative experience with IR (even if it is only once), that may taint their view of the company for good.
  - If research is correct/accurate, it is a powerful statement being conveyed and should be presented to uncooperative executive teams, as the larger 25% underlines the need for stronger communication with the buy-side.

The chat then turned to a conversation about “What constitutes good IR?”

• A company builds credibility by educating and communicating in good times and in bad. 
• Tailored targeting: contacts approached and the number of successful connections – with good IR targeting improves over time.
• Standard metrics such as liquidity, number of meetings, changes in shareholder positions and perception reports to name a few.
• Providing more detail and transparency around investment story as well as more access to senior management (not just CEO, CFO but other key players i.e. product, engineering etc.)

Coincidentally, another article in the Economic Times entitled “Companies with Good IR can command premium” was issued within a few days of the Rivel findings.  The survey covered 24 fund managers based in India and found:

• 29% of investors would pay a premium of anywhere between 10- 15%, and about 16% of institutional investors would pay a premium of 5-10% on share prices of those companies with a good IR program in place.
• Drilling down, the study found that institutional investors believed the most important quality of a firm’s IR is credibility of management and the IRO.

In spite of the differing sample sizes from both studies, the findings indicate that good IR practices are being recognized by investors.  While these studies are not considered scientific, in my opinion, anecdotal commentary is still useful information to have from an IR point of view.  If nothing else, it may make IR professionals stop and think about their interactions with shareholders and to either keep on doing what they are doing or make the necessary changes to enhance their relationship with the investment community.

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With experience as both an in-house IRO and IR consultant, I know the day-to-day challenges that IR professionals face.  One newer challenge has been the question of whether to embrace social media as part of the broader communications strategy.  Although I am not a practicing IR professional anymore, I was curious to hear how consultants were dealing with this rapidly emerging topic.  With that, I asked Trevor to be interviewed with the goal of compiling tips that would help consultants handle client inquiries about social media.

1. What does Equicom stand for and what does the company do?

Equicom stands for Equity Communications. We develop and execute strategic investor relations programs for issuers that enhance the value and utility of their public listings. Our approach is pretty straightforward — by thoroughly understanding our clients’ businesses and by leveraging our expertise and knowledge of “the street”, we help our clients to effectively communicate their key messages, manage expectations and raise their profiles within the investment community.

2. Trevor’s bio

Trevor has more than nine years of marketing and communications experience in the financial services and capital markets industries.  As a Senior Account Executive with the Equicom Group, he provides counsel and develops and executes strategic investor relations programs for publicly listed companies, primarily in the Consumer Products and Retail sectors.  Trevor was instrumental in developing Equicom’s investor relations social media offering and has begun to work with clients to develop and implement their own social media strategies as part of their investor relations programs.  He has an MBA from the Sobey School of Business.

3. How has the firm prepared for inquiries about social media from clients?  Any specifically related to its’ use for IR?

We have set up an internal social media working group that has run education sessions for our employees. Following these education sessions, each Equicom Account Executive was tasked with reaching out to their clients to discuss social media with them to determine whether or not developing a strategy as it pertains to their investor relations programs made sense.

TMX|Equicom Social Media Services

We have also developed a fact sheet, which outlines the social media services we can provide to clients. This fact sheet was recently sent to all of our clients.

4. Have there been cases where the client wanted to jump right in and you didn’t feel it was the right time?  How was this approached?

Not really.  However, we do feel that it is important for there to be clearly defined objectives, and preferably, a strategy in place, prior to using social media to augment your investor relations program.  At the outset, we would at least want to make sure the client had some basic groundwork done first, starting with an audit of the social media landscape to see where discussion about their company might already be taking place and how their competitors might be using social media.

5. The firm has a Twitter account and tweets client news – is news tweeted for every client?

Yes, we tweet all of our clients’ news releases. We also tweet client roadshow activity, presentations, and notable corporate developments.

6. Did the firm need client permission to do this?  Was there a formal internal discussion that ensued around the pros/cons of doing this? Any standard operating procedures that developed as a result?

We sent out a client communication letting each of our client’s know that we wanted to tweet their news release headings and links using our Equicom Twitter account.  We did not receive a single objection.

Before we started our Equicom Twitter account, we had many internal discussions regarding the use of social media and Twitter specifically and how the tools might be used to build profile for our client companies as well as Equicom itself.  We felt the pros far outweighed the cons. With that we created our social media working group and began formulating our go-to-market strategy.

7. Has tweeting on your clients’ behalf increased awareness for their company?  Equicom?

In general, I would say yes. Tweeting on our clients’ behalf has increased awareness for our client stories, but for some more than others.  Our clients that have benefited the most are the ones which have asked us to become more engaged on their behalf – by adding commentary around their news and/or setting up a client-specific Twitter account and/or sharing additional materials using tolls like SlideShare or Box.net. Clients who have made a conscious effort to implement and maintain a full social media strategy are definitely the ones who have benefited the most.

Through increasing awareness for our clients, we raise awareness for Equicom itself.  It is another avenue that we can continue to demonstrate the diversity and breadth of our client base.  Over time the number of our followers on Twitter has grown and we often have our content retweeted.  However, I think the best example is that we have recently begun receiving calls from non-client public issuers interested in how we might be able to help them use social media to enhance their investor communications.

8. Is there more than one person who tweets on the firm’s account?

Yes.  Our clients are divided into sector focused teams.  Tweets specific to a particular sector are tweeted by a designated person within that group.

9. Does the firm have a social media policy in place for employees?

We have a policy with respect to what type of information can be shared or posted to our Equicom Twitter and SlideShare accounts, and our IRmatters blog.  We have also adopted a separate policy for how we engage in social media on our clients’ behalfs to ensure we act ethically and adhere to principles of accountability and transparency.

10. How many clients are using social networks?  Does there seem to be one network they gravitate towards first?  If so, how do you counsel them on the merits and downside?

A growing number of our clients are either using, or exploring using, social networks.  Importantly, we are beginning to receive interest from non-clients, so we do see this as a business development opportunity as well.

While it’s a small sample size thus far, Twitter has been the primary network used by our clients.  We do our best to explain the usefulness, and the limitations, of Twitter in comparison to other sites.  However, we also acknowledge that this is a new frontier for our clients, and for the most part, for IR in general.  I believe Twitter is an easier jump to make than some other sites because it is easier to understand and use.

11. Do any clients use social media strictly for IR?  Are you seeing anything interesting on this front?

We have a few clients that are using social media strictly for IR.  In these instances, we have found that social media can be particularly useful for providing more detail about a company’s business, its operations, markets, technologies, etc., to help investors understand the company better.  Of note, China Wind Power International was the first Canadian public company to live tweet from its AGM.  We also made a Slidecast of their AGM presentation and have had well over 1,000 views on SlideShare since their AGM on November 12, 2009.

12. Does the firm monitor social networks on behalf of clients?  Is this information presented to them?  Do clients find this information valuable?

We do monitor social networks for those of our clients that have asked us to be more engaged on this front.  Based on the feedback we have received to date our clients have found this information valuable.  Our clients are always seeking more information.

13. What tips/steps would you offer consultants in helping clients get started in social media?

First and foremost, you have to use these tools yourself and get to understand the rules of engagement first hand.  You can not offer up your expertise on something you have never used;

Second, you need to be aware of both the pros and the cons; the opportunities and the risks of using social media for business purposes;

Third, you need to determine which social media tools or sites are best to use for your client’s specific business, starting with where their audience is most likely to participate.  The functionality of a social media tool or site is always secondary to the location of your audience; and,

Fourth, begin taking baby steps with your client.  As they become more comfortable with it, take it to the next level.

14. Anything else to add?

Senior Management teams should be aware that social media has evolved into a powerful, relevant and targeted communications channel.  On the IR front, by using social media public companies are more likely to discover how investors and other business stakeholders truly perceive them. If planned and implemented correctly, social media communications as part of your overall investor relations program can be an effective and cost efficient way to attract new audiences to your investment story.

With all of the benefits and promises of social media, we also need to be aware of the potential consequences, specifically with regards to regulatory issues.  However, social media is no different than a corporate website and all other electronic disclosure media, in that they should all be considered an extension of a company’s normal disclosure practices and therefore subject to the same policies and regulations.

Finally, as thought leaders in the IR space, we need to keep abreast of change and know when to help drive that change in our industry.  It’s an evolving industry and more and more, we are seeing that social media is a powerful tool, which we believe will be a part of that evolution.  As such, we will continue to develop our social media programs to take advantage of established and emerging tools that can help our clients expand their awareness and achieve their capital market objectives.

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Since the think tank, I have had several conversations with Tom and learned how he leverages social media to gain a “first mover advantage” and how he (and other analysts) use Twitter, blogs, facebook and various other channels to gain a more detailed mosaic of the company.  I found it quite interesting to learn that in a number of cases Tom has read information on a blog or social network that caused him to dig in further.

Seemed the best way to share Tom’s views was through an interview.  Last week we spent about 25 minutes talking about the capital markets, research, investor relations and social media.  I encourage you to listen or download the audio file:

Download MP3 File (11 MB)

During the interview you’ll hear Tom’s thoughts on:

• How his daily research activities have been affected by the social web
• How he manages risk when obtaining information on financial blogs and social networks
• Whether the use of social networks by a company influences his intent to cover them
• What kind of content companies should be sharing
• How financial blogs such as Seeking Alpha have changed the financial landscape

Hope you find it interesting.  Please let me know what you think.

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Dealing with the buy-side has been pushed to the top of the priority list for IROs – especially since there has been a slow decline in the number of sell-side analysts over the past few years. This coupled with the spotlight it has been given at this year’s NIRI conference with a panel discussion entitled “How the Buy and Sell Side Trade your Stocks Today” (and the fact that there was standing room only) along with the discussion I outlined above has prompted me to share some ideas for IROs to consider when dealing with the buy-side.

THE IMPORTANCE OF IR

The IRO is the liaison between management and the investment community so it is essential a rapport is established early on. One way to do this is to become a credible source of information which means being well versed in the company and having the ability to answer their questions. Being a  source of valuable information is very important as a recent study of the buy-side by Rivel Research suggested, IR plays a role in their investment decisions, as they “uncovered that portfolio managers and buy-side analysts attribute a premium of 10% of a company’s valuation to good investor communications and a discount of 15% to bad investor communications”.

The research previously cited proves that  how well the company conveys itself to the investment community is taken into consideration and if an IRO can prove early on that they are capable of answering questions, they will potentially be the first person that the portfolio manager calls for information.

Keep in mind that, while it is important to be able to adequately answer questions, these conversations don’t have to be one-sided, and understanding how they make decisions to buy or sell is crucial to IR messaging and objectives. So go ahead and ask specific questions.

BUYING

Idea generation:
• What’s the most successful way to get you to look at a company?
• How reliant are you on sell-side research and sell-side ideas? Do sell-side analysts or equity sales play a large role in idea generation?
• How do you decide which analysts you think have the most credibility? (external ratings, internal research team evaluations, track record, etc)

Criteria (fundamentals, metrics, model, sector, management)
• What is your investment process?
• What is the first thing you look at? Fundamentals, management?
• Are there key metrics that you follow? What are they and why?
• What is the proportion of your holdings in large-cap, mid-cap and small-cap?
• Do you meet management of every company in your portfolio? How high do you rank access to management in your investing process? When you meet with management, do you strongly prefer one-on-one to group meetings? Does it depend whether the stock is one of your core holdings?

SELLING
Triggers
• What are the key triggers that lead you to a decision to sell?
• What is your process internally for selling? Is it the same as the buy process, does it need to go to a committee?

GENERAL
• What is the average time you hold a stock?
• Does the quality of IR play a role in your investment decisions?
• What are you expectations from investor relations and what have you found to be world-class IR practices?
• Do you go to dealer-hosted conferences and take meetings there?
• Do you prefer to be contacted by the company directly to offer a meeting, or are you just as happy to have a dealer set it up and host?
• Do you find investor days valuable, and what do you expect from them?
• Do you encourage or want issuers to provide earnings guidance? If not, any other type of guidance, given the current environment for extreme volatility if targets are missed, even by small amounts?
• Has the current economic environment changed your approach to investing; are you analyzing different fundamentals e.g. are you paying more attention to the balance sheet now then you did before?

Traditional Media and Social Media
• Do you talk to reporters or go on financial shows to talk about your thoughts on a company or investment ideas? Do you see any value in that?
• Do you ever check out chat rooms about companies?
• Does social media like blogs or Twitter in any way affect how you get or share information professionally?
• Do any of the companies you follow use Twitter?
• Do you read financial blogs like SeekingAlpha.com or follow investors on social networks?

I would like to thank some people (who asked not to be named) from the Ontario Chapter of CIRI who helped me compile these ideas.  We recognize that there may be some additional areas to be included, but wanted to keep it to buying and selling.

As the number of sell-side analysts continues to decrease, interacting more with the buy-side has been pushed to the top of the priority list for IROs. Successfully communicating a company’s story is highly valued in their eyes. Becoming a credible source of information and establishing a rapport will foster two-way communication that will benefit both parties – PM’s will be more apt to call if they know they will get valuable information by calling the company directly and IR professionals will be given the opportunity to gain an understanding of how and why decisions are made to buy or sell which is crucial to IR messaging and objectives.

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. Buy-Side seminar points to the web and social media as prime channels of communication I attended an interesting CIRI (Canadian Investor Relations Institute) round-table...
3. How the Buy and Sell Side Trade your Stocks Today Live from NIRI ’09 – Session: How the Buy and Sell...

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What follows is some of his advice to IR professionals for keeping pace in this rapidly changing regulatory environment.  He also discusses current challenges and opportunities and ways to address them. 

CHALLENGES & OPPORTUNITIES

Combating External Communications 

Regulation is evolving so rapidly it has become one of the key challenges for IROs right now.  All of these regulations clearly have an impact on how companies are currently conducting business and IROs should be good at:

1. Staying at the forefront of communications and keeping on top of what is being said externally about the company.
2.  Taking that information back to management and incorporating this into your strategy for dealing with shareholders.

Doing More With Less

The current economy has imposed budgetary constraints on companies which has made looking for ways to “do more with less” another key challenge.  Some ways to be more efficient and effective include Notice and Access tools and making improvements to your IR and corporate website.  The IR website is the dominant channel for investor communications and is one of the first places that investors, analysts and the financial media go to for company information.  So it is extremely important that is conveys your investment proposition and outlines your business strategy so potential, current and long-term shareholders have current and up-to-date information at a click of a mouse.

NIRI understands the importance of the website, as they will be launching a new version of theirs in mid-July.   They want members to use it as a first access point and are slowly revamping how information is laid out.  For example, they will group information they put out in categories or ways members will naturally go about seeking that information. The changes are expected soon.

Shareholder Communications

Another challenge facing IROs is how they communicate with shareholders.  Social networking can increase audience reach and allow companies to get to know their shareholders better through direct interaction – as traditional press releases, earnings calls and corporate presentations can be viewed, shared and disseminated on Twitter and discussed on blogs.

Jeffrey sees IR as the gatekeepers in social media and with companies slow to adopt these tools, feels IROs are well positioned to take the lead on implementing this into their communications strategy. “I think IR is in position to work with it. Whether we like it or not, this will happen around IR people. It will touch IR in a way where you can’t be sheltered. So you will have to deal with it—and it’s a good idea to start in a position of leadership, instead of waiting for it to happen to you.”

To summarize, in the coming year, there are three areas that he feels IROs will have to improve their professional skills:

1. Legal – as the leader in FD compliance, IROs must keep apprised of all of the regulation changes and stay on top of understanding what those changes mean. 
2. Social Media – IROs “must understand those communication vehicles. It’s incumbent for any IR person to try blogging, Twitter and using social mediums to bring the discussion back to company. Become an expert in it—that’s my advice now. That also relates to the regulatory and legal side. By understanding this, you can understand how to use it in compliance with Reg FD.
3. Financial Education – IROs need to become educated on alternative trading systems such as dark pools to help them understand who is trading their stock.

All of the aforementioned are ways in which IROs can increase their importance within the company.  For example, staying on top of all the regulatory changes can help elevate you to a key resource within the company.  Secondly, being proactive and communicating in social media forums will help you build better relationships with shareholders and increase your company’s profile.  It may also help you address contentious issues and address them head on in a timely manner before they escalate into a crisis.  Lastly, keeping apprised of alternative trading systems will help you understand  who your investors are and may even provide insights on the hedgers in these areas.

Related posts:

1. From NIRI 2009 – The Evolution of Financial Communication On June 10 I attended a panel discussion at the...
2. How to implement new Reg. FD web disclosure – a legal opinion As many of you know, over the past several weeks...
3. CICA’s Corporate Reporting research documents highly valuable to IROs Last week our CEO, Darrell Heaps, and I presented to...

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