Expert targeting tips: interview with a 20 year analyst and seasoned ex-IRO

Targeting the right investors and driving strategic value is at the heart of any successful IR program. In fact, in IR Magazine’s recent Objectives and Challenges Report, 75% of the 600 IROs surveyed ranked targeting as one of their top three goals.

But whether your targeting exercise is once a year or once every quarter, the key is to get the process down to an exact science and find the methods that work best for you. You just need the right approaches (and tools) to get some visibility into the incredibly vast investable universe.

To gain some insider insight into the most effective ways to target and the ins and outs of the process, I recently interviewed Mike Coffey, a surveillance analyst with over 20 years of experience (Q4’s VP Business Development for Intelligence) and Matt Tractenberg, a former IRO who has worked with small to mega caps for over a decade (Q4’s new Investor Relations Partner).


Q4: Speaking from your capital markets experience, what key targeting tips can you share?

Matt Tractenberg (MT): There are numerous ways to target and the more you do it, the easier it becomes. The actual targeting process can be as simple or complex as your make it. There are a few different schools of thought. I suggest that IROs employ as many as of these approaches as possible to cast the widest net:

  • Targets who already have potential exposure to the space and your peers. These are considered “warm” and are likely educated on the competitive space, themes, and commonly used metrics. They’re also easy to find. This is the most common type of “peer” targeting.
  • Next, we can target purely based on fundamentals financial metrics, including valuation multiple, growth rates, margin expansion, cash flow profile, or even consistency of results. We then seek fund profiles that closely match our own metrics. This is relatively straightforward as well.
  • However, many investors are considered generalists. Their strategy may be to seek favorable themes (e.g. “Internet of Things”, China, 5G, etc.), exceptional management teams (e.g. the IBM pedigree), unique strategies or concentrated market share (e.g. Netflix), or strategic “styles” (e.g. highly acquisitive). This capital is difficult to screen for, and requires a more thoughtful eye. Ensure you’ve appropriately captured your own themes and characteristics, so you know how to position yourself within the market. Now you have to peak their interest. They’ll take a call from you not because they know the space or own your peers, but because they might want exposure to your theme. Remember, you won’t get that information through quantitative analysis, but rather by teasing out the holding profile and portfolio makeup of that particular firm. Don’t be afraid to seek expert advice to find this capital.

Now that your targets have been determined, the fun begins. Most IROs work to engage with each of them via conferences or NDRs, and track that engagement in a CRM application. My advice: be deliberate and thorough in your annual calendar planning, to ensure you can successfully report back to your leadership team each quarter.

Before you begin the year, use this list to plot out the regions and events you need to attend, and place those trips and events with your executive team’s schedule on your calendar. This provides visibility and reduces calendar conflicts. I found that preparing a list of the top ten potential buyers, in each major US and European city, allowed me to quickly react to a last-minute trip, or a change in schedule.

Remember, this is a marathon, not a sprint. Cultivating relationships to a point where trust and value exists takes time, often years. Set reasonable expectations with your leadership team as to the viability of each target, why they made the list, and the steps needed to bring them onboard. Report progress against those steps each quarter. At Q4, we actually have a CRM tool that automates this process, so you don’t need to recreate the wheel every time.

Think of your targeting list as a living, breathing document. If it’s clear that a target isn’t interested, replace them with another prospect. This is a process, and one with many steps beyond simply “find target” and “target buys shares.” Most executives understand this, and welcome a process that allows them to see the target move through the process, or funnel.

You should deploy as many of these techniques as you can. Even if you like quantitative targeting, you’re still likely to run into fund managers whose style is unique. For example, I’ve met portfolio managers who admire executives with specific pedigree. If your CEO employs a proven business system, leverage it. Your CFO came from a well known financial institution, use that. Companies like IBM, Intel, Danaher, Goldman Sachs, Google, or Apple have a reputation that resonates with investors. Use that to your advantage. Perhaps they’ve had a positive experience with companies run by executives with that pedigree.

You often find these sorts of insights, by getting on the road and talking to investors. Don’t be afraid to ask the buy-side if your story might be interesting to any peers they collaborate with. Perhaps an old colleague or a different fund at the same firm. There are dozens of methodologies, and teasing out who could be a potentially good fit for your shareholder list is a genuine talent to be cultivated.

Mike Coffey (MC): I’d just add that the lowest hanging fruits are names that own you, but are underweight in your stock. They already have a position and know your story, but don’t feel comfortable enough yet to take a fully weighting in your stock. I advise starting with these.

Q4: Are there any “secondary” targeting approaches that you would recommend?

MC: Yes. The names that may not be a fit right now, but potentially later. Something could happen and you could suddenly become a value stock. Having conversations and making relationships with high quality investors along the way is key. Maybe at the time they didn’t buy your stock, but now they’re familiar with your story and management team. These are the secondary names that you want on your radar.

MT: I agree. If my stock suddenly sells off, I’ll start showing up on the radar of value investors. I need a contingency list of names to reach out to who maybe thought I was too expensive before, but now I’m more palatable to them and can have a successful conversation.

MC: In this bull-run, a lot of stocks have gotten away from people. I’ve had clients who will meet with investors who feel they missed out on an opportunity, because the stock is now overvalued. With today’s market structure, stocks can come under pressure due to index selling, algo trades or non-fundamental factors. By having conversations with a variety of good names, you lay that groundwork. So if an unexpected opportunity arises, funds that did not buy shares at the time you met with them, may now have a opportunity to step in, pick up shares and support the stock.

MT: Think about opportunistic investors who look for event-driven opportunities like an acquisition, introduction of a new technology, entering a new geography, a product launch or hiring a new executive. Anytime you change the DNA of the business, you’ll have a different set of eyes looking at it. Be prepared for that. Use that to your advantage and attract a new thematic generalist.

Q4: How can you best align your targeting efforts with your value proposition?

MC: You need to know who you’re targeting and the story you want to pitch. Make sure your story matches the investors you are targeting. Understanding your investor is critical to framing your conversation. It’s key to do your research and understand why an institution would want to own your stock. Know what type of investors they are, their goals, the main drivers of their portfolio, and then ensure senior managers are hitting on these key themes when they’re having a conversation.

Q4: Are there targeting techniques companies tend to overlook?

MC: When I first started in the business, technology wasn’t nearly where it is today. The raw targeting that we did back then was “who owns your peers, but don’t own you.” That was the main filtering tool. The reality, however, is that there’s usually a reason why they own your peers but not you, and with regards to hedge funds, they could actually be short your stock.

Fast forward to today, there’s a tremendous amount of data available. Parsing through all of that information is key. You can find out about portfolios that are a great fundamental match. And then before the meeting, arm your CEO or CFO with critical insights into the investment drivers of these funds.

Using all of the technology at your fingertips, you can be more selective than ever before. Artificial Intelligence has also become a real game changer. For example, if you’re planning a trip to New York City, you can look at a screen and slice and dice the data in so many ways. You can be selective about meeting only high quality names. You can leverage the highest AI Targeting scores that fall into specific categories, and then dive into the individual targets to figure out the driving factors behind them (such as if the portfolio is leaning towards dividend growth or more interested in revenue growth). There are so many impactful ways to look at the data.

MT: I put a lot of weight in networking. I ask most potential investors and all major shareholders if there are other funds that they think the story would resonate with. Be blunt and ask questions. Never be too proud to ask an investor for feedback or ideas, including if there is anything else you should be doing to attract investors. As owners of your company, if they can help create demand, they will.

Q4: What are the differences between targeting an IPO versus a well established public company?

MC: For an IPO it’s about getting investors engaged with the story. An IPO company will go to a lot of roadshows, even before going public to attract investors. It’s important to set the tone early on, to get good names in the stock. Work with your analysts and CRM products to hone in on who are the high quality names that will take a meaningful position and become long term owners, versus demand from hedge funds.

For a more established company, it’s important to figure out where you are in that cycle. For example, a company who has been hit hard and is under pressure, needs to be less selective, get stability in the stock and bring in the names that will buy shares and take the stock off the lows.

Q4: Have you experimented with any successful “out-of-the-box” targeting methods?

MT: As IROs, we accept the invite from the bank and a list of investors who have requested a meeting. But brokers tend to put their best interests first (instead of ours). Oftentimes I’ll get a call from a good shareholder or long-only prospect who says they couldn’t get a meeting with me. Banks are infamous for screening the list and taking off folks who aren’t their best clients. They’ll attempt to force-feed their best accounts into my schedule, rather than what is in my best interest. I have to take responsibility for who I speak to. I have to take ownership, find out who will be there and make it worth their while to speak with me.

If potential investors are not covered by your existing sell-side analysts, you’ll miss them, because you’re relying on bankers who will likely put you in front of their clients first. But the reality is that as an IRO, our job is to get in front of the right clients, not just their clients. You need to open your list as wide as it can be. I look at IR through a sales lens, with the goal of getting in front of the right investor or “customer.”

Find out where your best shareholders might be, whether that’s conferences, industry events, expos they attend. And then reverse engineer an event. Start by asking the corporate access desk if they’ll allow you to attend and host 1x1s at their conference. Ask for a list of attendees.  Go through the list and see if you spot your targets. If you do, let them know you’ll be there, and ask if they’ll join for a 1×1. Don’t rely on the sales team to drive interest. Take control of the process.

Q4: How does cap size affect targeting techniques?

MC: There’s a huge difference when it comes to how different market cap companies should target. For example, Dodge and Cox is one of the best names in the world. They’re a long-term holder that could be a top five holder of your stock if they get involved. But they’re specifically mega cap. If you’re a small cap, you’re destined for failure if you’re targeting them. Knowing where and if you fit in these portfolios is essential when you’re targeting.

MT: The IRO should be looking for shareholders who have a sizeable appetite and can move the needle of demand. The larger the market cap, the larger the target needs to be. Finding a sizeable shareholder is hard for a DOW component. Finding one for a Russell 2000 stock is easy.

Q4: In what ways can IROs and Analysts optimize their relationship to drive better targeting together?

MC: Feedback is key. When you go through your targeting list and conferences, make sure everything is aligned with your goals for the meeting. You need the most current data points from your analyst, along with the key historical data right in front of you. Open communication back and forth is huge and supports us analysts in tracking trends going forward. An IRO’s meeting notes can also help us track institutional ownership.

It’s also crucial to be proactive and let the IRO know about what trends we’re seeing. The advances in technology and the sheer volume of information we can use now, we’ve never had before. Having these additional data points from sources like AI targeting and alternative data is huge. For example, knowing that a hedge fund has a low AI targeting score and owns many of my peers could indicate the hedge fund has engaged in a pair trade and could actually be short my stock.

MT: I really want my analyst to be proactive and take the time to understand what I’m trying to achieve, along with the personalities and preferences within my organization. Analysts should understand the nuances of these internal personalities that I need to navigate.

The best analysts understand my work product and workflow, as well as when and how their product needs to consistently look and be delivered. This includes standardizing on what’s most important to me in a surveillance report. Ultimately, they understand that the more successful I am, the more loyal I’ll be to him or her and the service.

For more information about leveraging successful targeting approaches, please visit us online or contact us directly at

Marla Hurov is the Content Marketing Manager at Q4 Inc and blogs regularly about trends in investor relations, technology and digital communications.

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