Over the years, I was asked by many clients and companies this: What can we do to meet more investors and bring on new institutional shareholders?
At a time when the capital markets are expected to experience turbulence, it can be even more challenging for small-cap companies to attract the attention of investors when many rushes to embrace blue-chip stocks. More than ever, developing strong foundation work will be the key to strategic targeting. To maximize the impact of your investor access strategy, use the following points while planning for your 2023 investor targeting plan:
Understand your audience.
By applying audience insights and collected data to your investor meeting preparation, you can more effectively target and emphasize your message on the issues your audiences are most interested in. We strongly recommend IROs know the nature of the fund before the meeting; understand the fund style (for example, value, growth, or blend) and the fund manager’s investment philosophy and process. Having the prior background knowledge of the investors ensures we can highlight the specific key points that will resonate with them.
Clear company positioning.
A better understanding of your company’s positioning in relevance to the industry and peers is one of the best ways to accurately differentiate the company from the other players. Sometimes small-cap companies adopt the strategy of aligning themselves with the big players in the industry; however, this may lead to investors contemplating what sets your business apart and why not invest directly in the tier-1 players instead. To ensure the market can have a precise understanding of your company, we encourage you to begin with a thorough and realistic knowledge of your company and to know the secret sauce behind the management team’s operation.
From a portfolio manager’s perspective, they are interested in knowing your product capabilities, how sticky your relationships with key customers are, and how efficiently can the executive team run the business. By having the company knowledge ready, you can develop a consistent story for all investors and poise your company as an attractive investment opportunity (for example, a momentum or dividend stock).
Be prepared for the beginning of a long-term dialogue.
Too often, we hope the investors will initiate a position on our stock after having a conservation with them. However, the process may be longer than what you have in mind. They may have to sit down with the management teams many times to understand their decisions and what drives future decisions; they also need to witness a proven track record of delivering results. Therefore, it is essential to remember that converting a prospective investor into your shareholder takes time.
Author
Kevin Yang
CEO
