Investor Targeting Strategy: Five Critical Ways to Optimize Yours

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Targeting the right investors is crucial to growing your shareholder base and boosting your company’s liquidity and visibility. But developing and implementing an effective investor targeting plan isn’t always a walk in the park. We identified some common IRO targeting hurdles, including time and budget restraints and the nuances of today’s changing investors.

You can overcome these hurdles with the tips and tools to develop a well-planned and effective investor targeting strategy. Here are five fundamental techniques to help establish a promising investor targeting strategy.

Analyze Investor Ownership

Understanding your investor landscape is critical to an effective targeting exercise. One of the simplest and most effective targeting techniques is looking at current underweight shareholders compared to a specific position. They have familiarity with your story and sector and have the potential to size up. Spend some time looking at who makes up your shareholder base and why. 

This exercise also opens the door to other “low-hanging fruit,” like investors who do not currently hold your stock but could be a good fit based on peer holdings In a recent interview, Matthew, an Investor Relations Partner at Q4, explains, “Targets who already have exposure to your peers are “warm” as they already know the competitive space, themes, and metrics. They’re also easy to find, which is part of why it’s the most common type of ‘peer’ targeting.”

Understand Investor Targeting Mandates (Thematic Targeting)

Matt also suggests identifying what themes are driving your business and aligning those with the interest of investors. He argues portfolio managers tend to invest in things that they have a predisposed position on, such as a good theme (e.g., “Internet of Things”), an exceptional management team (e.g., the IBM pedigree), a business trend, or macroeconomic driver. Matt explains, “If I can identify a theme and apply it to others in the industry, I can then find out who is buying those other stocks based on that trend and initiate a conversation.”

Geographical Considerations

Look at critical regions where you might be under-represented. Geographical targeting can be a big deal, especially at North America’s most significant capital centers. Suppose you aren’t adequately represented in that area, and there’s interest in the peer group. In that case, it can be an excellent opportunity for management and IR to fill a valuation gap.

Leverage Technology

The hallmark of a good targeting program is rooted in data and technology. Investor relations teams today have access to more data than ever before, with visibility into who is visiting their investor relations website, downloading content, attending earnings calls, and watching webcasts. Leveraging engagement analytics toaggregate this information is a great way to uncover potential investors who have shown an interest and want to learn more about you.

These insights are a great place to start building your targeting list because those people already know your name. You can skip the elevator pitch and say, ‘I noticed you joined us for that conference call. Are you willing to sit down and chat about it?’.

And while, as individuals, we simply can’t analyze the sheer volume of data available, we can reap the benefits of technology. The reliance on brokers for investor targeting has decreased significantly, with most companies using tech platforms to enhance its investor targeting strategy. 

Data Analytics

For example, Q4’s AI Targeting tool leverages capital markets intelligence and machine learning to uncover the ideal investors at precisely the right time. Its ability to crunch multiple data sets is undoubtedly beyond the realm of any human analyst. The algorithms analyze more than 700 factors to predict which investors are in the best position to buy your stock over the next 90 days. 

IR teams can then analyze this data and how well these investors align with their company. Investor Relations teams should also look at a quantitative score, like Q4’s AI targeting score, to determine a decent fit within a portfolio and supplement the insights with firms or funds that can purchase material positions on stocks.

Plan And Diversify Your Conferences

Investor conferences are an ideal avenue for you to tell your story to investors and present an efficient opportunity to meet numerous investors. But, planning and being strategic about your conference attendance is essential. In addition to attending a bank’s annual conference, look for additional opportunities outside your comfort zone. 

For example, banks are increasingly hosting thematic conferences focused on specific industry areas, allowing IR teams to reach investors with a particular interest in their industry. Also, keep an eye out for conferences that aren’t necessarily industry-specific, which may attract generalist investors and portfolio managers. While this type of investor may not be as well-versed in your industry, they may still have an affinity or appreciation for your business themes. 

IR teams should also plan meetings around the leadership team’s existing travel schedule. Try to be proactive in finding out where your targets are and which executives will be in those areas at specific points in the year.

Think Holistically

While a well-developed targeting plan is helpful, it doesn’t go far without a plan to engage with the targets. Align your targeting plan with your annual calendar, fit top targets into your travel schedule, and match them with the right speaker. Map it out quarter by quarter and ensure you get in front of the right people.

Recognizing that targeting is a marathon, not a sprint, is essential. Much like a sales pipeline, an investor targeting strategy is an ongoing exercise where you’re cultivating relationships and nurturing leads often time, often years. It’s not uncommon to begin a relationship where, at this point, you do not fit into their portfolio. Instead, you’re identifying them as a “potential customer” for the future. It’s rare for an investor to buy stock days or even weeks after a meeting. 

Measuring the success or failure of a target exercise on a quarter-to-quarter basis is selling yourself short. Mark recommends leveraging data to show progress to the C-suite. For example, downloading content or watching webcasts can go a long way.

Download our ultimate guide to targeting best practices for more successful targeting techniques.

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