Targeting tips from a shareholder ID analyst

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Over the last 20 years as a shareholder ID analyst, I’ve had a front row seat to several IRO targeting efforts. The most successful programs clearly define their strategic objectives and measures of success, with a focus on the long term. Preparing and managing your travels with senior management is also key.

Large and mega caps tend to have it a little easier, as many of the names on their target list will already seek them out. For everyone else, it can be more challenging. Whether you’re a high rolling tech company in Silicon Valley or a modest mining company in Northern Norway, here are four essential recommendations for targeting investors.

#1 Define your objectives and approaches

First, create an annual targeting plan and define your objectives. What does your shareholder list look like now? How does it compare to your peer group? If you’re an IPO or younger company with a heavy VC focus, what do you want to look like when you grow up? Does your shareholder list match the story you’re telling the investor community? For example, if you consider yourself a growth story, check if the funds that hold you are primarily value portfolios. Is there a disconnect? Do you have a new story to tell?

After you’ve picked your target cities and locked down your investor day, define your targets. One of the easiest target groups is current investors that are underweight in your stock. I consider this group to be low hanging fruit because they’re familiar with your story and have already taken a position. It may be that the investor just needs to become more comfortable with senior management, before moving up the shareholder list.

You’ll want to stay leery of traditional strategies, such as targeting names that own your peers but don’t own you. Usually, there’s a reason, and in some cases (especially with hedge funds), these institutions may actually be shorting your stock. It’s also important to note that even traditional long-only accounts have introduced long-short or market neutral funds in recent years (which may also be shorting your stock). Names like Cramer Rosenthal McGlynn, American Century and Boston Partners are just a few that now carry short positions.

When it comes to choosing funds to pursue, take both a quantitative and qualitative approach. AI technology is unprecedentedly accurate for determining the fundamentals that are most important to portfolio managers. But make sure that you’re also targeting the funds that can take a meaningful position and hold for a long period of time. It’s also crucial to ensure that your current market cap gels with the investor. For example, Dodge & Cox is a great name but is unlikely to take a meaningful position in a micro-cap.


#2 Be strategic with your time and effort

If budgets are tight or senior management is allergic to travel, you may have to shift your focus to conferences, investor days, or corporate tours. Once you’re handed the conference list, push back with brokers for companies missing from the list that you also want to meet. There’s often a disconnect between who brokers put in front of you, and the investors that you actually want to meet. I find that compromise often leads to the most success. It’s okay to meet with one of the 10 arms of hedge fund managers Millennium and Citadel, just group them with the other fast money traders in a lunch or dinner. And save your one-on-one (or two-on-one) meetings for your best targets.

#3 Know how to measure success

You’ve established your plan and are ready to rack up those frequent flyer miles, but how will you actually measure success? I’ve heard countless stories of CEOs carrying around target lists, harassing IROs about why targets they just met haven’t yet bought shares.

It’s key to set realistic expectations and have the ability to measure interactions. In the past, IROs have had to wait for an institution to file with the SEC. But with today’s technology like advanced web and event analytics, we can assess success in a variety of ways. Did investors visit your website after a meeting and review your presentations? Are these institutions now participating in your conference calls?


Shareholder ID can also help you fill in the blanks intra-quarter. With the current way the SEC requires disclosure, institutional names can buy shares at the beginning of the year, but IROs might not know about it until later in the year. Shareholder ID can provide timely feedback, as well as intel on international holders who aren’t required to file in the U.S.

#4 Focus on the long-term 

We all want instant gratification, especially when you take your CEO across the country in search of high-quality investors. As a shareholder ID analyst, there’s nothing more satisfying than sharing the good news that a target has taken a position shortly after your meeting. The frustrating reality is that it rarely works that way. Fostering prospects can take time and it’s essential to set realistic expectations when creating a targeting plan. Above all, take wins where you can find them. Fidelity may have purchased shares last week, but now they’re showing signs of engagement, such as looking at presentations on your website and participating in your earnings webcast.

Over the long run, putting senior management in front of the right high-quality targets will yield positive results. Planting seeds with the right names may not bear fruit right away, but I’ve often seen investors take positions at future dates; whether it’s helping to stabilize a stock after a market sell-off, or stepping in to buy shares in a secondary offering. The secret to generating substantial ROIs is staying proactively committed to your targeting strategy.

Mike Coffey is head of Business Development, Intelligence at Q4 and has over 20 years experience in the capital markets.

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