Defining Your Investment Narrative in a Volatile Market

Leading Your Investment Narrative in a Volatile Market

As the global economy grapples with the impacts of a volatile market, investor relations officers struggle with how to respond to these new conditions. Many IROs may feel there isn’t much they can control right now. However, there are several things IROs can do to retake control of their investment narrative as they adapt to the new market landscape. 

Revisit Your Investment Narrative

Major market movements can cause significant shifts in investor perception across the capital markets in all types of securities. Macro and sector factors coupled with big swings in sentiment can cause investors to completely rethink or retrench their positioning as they reassess what to add to current positions or where to make new ones.

In these environments, it’s critical to revisit how you’ve positioned yourself to investors regarding your overall investment proposition, key messaging, and the financial and operating metrics you’ve been using to tell your investment story. 

For example, many companies previously considered growth companies due to premium valuations may now make their way onto long-only value investors’ radars because of the new market conditions. This is due to dented valuation measures like price to sales, price to earnings, or EV / EBITDA ratios. 

This is a significant area of focus if those in your peer group have yet to experience similar re-ratings or are now trading at a premium. As you do your re-evaluation, ask yourself: 

  • Is our past messaging still consistent with the current and projected operating performance of our business?
  • Has the messaging from my peers changed?
  • Is there a way to double down on the business’s unique value to cut through the noise caused by macro factors?

The sooner you can identify where the capital markets are now relative to your and your peer’s investment narratives, the better equipped you’ll be to refocus on finding and targeting the right sets of new investors while working with current investors to instill continued confidence.  

Deep Dive into Your Current Investor Base

Once you’ve revisited your investment narrative, it’s time to analyze how it maps against who is and who should be currently holding your stock. 

Start by leveraging an organized shortlist of critical investors who currently hold a position in your company. Then look at those investors who have yet to invest but should be based on their investment strategy or peer holdings. In this analysis, dig deep into your past engagement efforts and prioritize based on when you last connected. 

Once this strategic analysis is complete, update existing and potential investors about the business’s operating performance and contextualize your investment narrative against the capital markets backdrop. 

Grounding your engagement efforts armed with this information can help you thoughtfully make the right calls to the right people and increase the likelihood that current investors up their allocation or new investors take a position.

Reset on Who is Watching Your Stock

When the market becomes volatile, many investors expand their view into new opportunities for making-opportunistic allocations. For IROs, this can present unique strategic opportunities to share your investment narrative with new partners but also can present activist risks.  

To start, examine who has been attending your previous earnings calls and events, who has been spending the most time on your investor relations website, and what type of information they are consuming. 

Once you’ve done this, compare that list side by side with the list of your current and target shareholders to see if you can uncover potential gaps in investor perception or if there might be an activist risk. This type of insight can be a game changer when it comes to an understanding how the behavior of current or potentially new investors might be driving changes in your company’s stock price. This analysis can also be useful if you are reevaluating your past targeting efforts to double down on your ideal investor profile via a new targeting program. 

Explore how Q4’s Desktop CRM and Engagement Analytics tools can help assess your investment narrative in a volatile market.

For more insight, you can also read about Bridging the Volatility Gap here.

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