Making the Most of Peer Analysis
5 November 2020
By Vanessa Hartung
Understanding what your peers are doing and how they’re communicating is essential to any successful IR program. Conducting a peer analysis to uncover how others are positioning themselves on key issues will help IR and management understand not only where you sit, but how to distinguish your company in a crowded space.
While certainly not a novel strategy, there are some best practices to be considered in conducting peer analysis.
Review Publicly Available Material
A great place to start is looking at the companies that your target investors own. Whether you share an industry or cap-size in common, these peers can provide insight into what key investors are looking at. Begin by reviewing the positioning and messaging within this peer group to understand their investment theses. Learn how they communicate their financials, whether ESG is a focus, how they define their total addressable market, how they position their C-suite, and as many other key points as possible. The context of understanding what your target investors expect can provide an exceptional template for developing and effectively communicating your story.
Begin with the low-hanging fruit served up on your competitors’ websites. The vast majority of IR programs being conducted virtually right now presents an even greater opportunity to access and review both written materials and virtual event recordings in almost real-time. Easily available on public IR websites, IROs can scan for keywords in peer transcripts, quarterly and annual reports, analyst research, press releases and investor presentations, to determine their stance on relevant topics.
Specifically, it’s become increasingly important to analyze peer earnings and analyst event Q&A. A key best practice is to aggregate live updates on all the questions asked on these calls and sort them by theme and relevancy. This can help quickly identify hot topics on the Street to ensure senior management is prepared to speak to these issues.
Examine Social Channels
Social media also provides an excellent opportunity to monitor the broader discussion around your company, competitors, and the market at large. It’s crucial to monitor activity on your social channels, as well as those of your competitors and industry media and pundits, for real-time feedback on what followers are saying and to gauge sentiment.
This monitoring can provide a preview of market activity, even predicting share price movements and volatility. Observing the social media accounts of your competitors provides a low-cost and easy way to learn how they’re engaging investors, gauge their shareholder reactions, and gain insights on what may be on the horizon for your industry and your company.
Take a Thematic Approach
Given recent and developing industry trends, simply identifying investors who own your peers may not go far enough. While a smart place to start, IROs must step up their typical targeting regimens and get more creative. Innovative IROs are responding to these changes and challenges by taking a more thematic approach to targeting, moving beyond industry peers to focus on a type of story or positioning to enable specific targeting of investors interested in key company attributes.
Unlike industry peers, thematic peers might not play in your sector but share one or more personality traits that portfolio managers might find attractive. While they may not own anyone in your space, target investors may find these specific traits compelling enough to initiate a position. Looking at this ‘thematic DNA’ can be extremely effective for targeting because it moves beyond financial metrics and identifies a group of prospective investors that the IRO may never have uncovered by utilizing a more traditional approach.
While this strategy can be more difficult to screen for, it helps ensure the IRO is positioning the company within a market where there could be real interest. A thematic targeting approach requires a deeper understanding of key company characteristics and a definition of what the company represents. Expanding the base of potential targets using this thematic focus can deliver real returns by helping to get your carefully crafted and compelling equity story to the right audience.
Some examples of these themes are:
- Market in which you participate (5G, Internet of Things, etc.)
- Secular trends that you benefit from
- Capital allocation strategy
- Management pedigree
At the end of the day, it’s all about accessing, analyzing, and utilizing data from a variety of sources to understand the position of your company relative to your peers. In an age of seemingly infinite sources of data, staying current on your industry’s relevant topics can be a daunting yet necessary task. Learn more about how data can be leveraged to improve your IR efforts by reading these stories from surveillance analysts.