Tagged: Investor Targeting

Ups and Downs

Suppose you were an elevator operator.

In 2013, the conservative Weekly Standard reported that the most senior member of the Senatorial coterie of button-pushers on the Hill pocketed about $210,000 in compensation, on par with investor-relations professionals.

The elevators have been automated in the Capitol since the 1960s, meaning anyone from Chuck Schumer (D-NY) to Senator-elect Bill Cassidy (R-LA) could push his own button and power a ride. When government-shutdown loomed in 2011, elevator operators were classed nonessential. But still they push and ride.

We’re not criticizing the Senate lift staff.  The people’s work has got to get done and our men and women leading the nation cannot be bothered with pushing their own buttons. But Ronald Reagan’s wry observation that the nearest thing to eternal life on earth is a government bureau comes to mind. In some office towers now, elevators are so automated that it’s impossible to disembark save at your predetermined destination. The elevator is alpha and omega.

So clearly, elevator-operation isn’t a growth industry. If that’s what you’ve been doing you’ll have to improve your skills and knowledge.  Jim Ziemer, who started as a warehouse freight elevator-operator retired as CEO of Harley-Davidson in 2009. There’s how you deal with ups and downs.

Looking at performance for active investment managers can make one wonder if IR is in the elevator-operator employment classification. The Wall Street Journal’s Jason Zweig wrote recently that 91% of active managers through September this year had underperformed the broad market (for years active managers have lagged but that’s a separate market-structure discussion).  IR spends most of its time and budget courting owners who can’t hold a candle to indexes and ETFs (in a sense, elevators that don’t need active managers as lift-operators). (more…)

Targeting Today

“So we should target value investors next week.”

Those eight words say much about IR today. I heard them on a weekly web meeting with a Nasdaq-traded company whose name most everybody knows. The point isn’t who said it. The idea applies to all of us. More in a moment.

First, at NIRI National next week I’m a panelist Monday along with Jason Lenzo, Director of Equity and Fixed-Income Trading at Russell Investments. Russell indices benchmark tomorrow for rebalancing, by the way. Our panel hits market structure and how it affects institutional trading and IR targeting today. Come ask tough questions.

Back to those words. There’s an action in them: Target. An audience: Value investors. A timeframe: Next week.

The kicker: This company is a growth story. What’s wrong with growth stories right now? Well, consider the environment. Yesterday, markets were briefly rattled by the Conference Board’s consumer confidence survey, which dipped more than expected. US stocks were up anyway, but not on growth. Money saw Chinese stimulus, Swiss capital controls to keep the franc from climbing, and rising yields on Spanish and Italian bonds as reasons to buy short-term shelters. US stocks.

Growth stocks, or value stocks?

Exactly. (more…)

Macro Factors and IR

Congratulations, IR profession! It’s happened.

One of our ranks stepped up to the stock-exchange rule-filing plate, planted, and cracked that fastball out of the park. Thank you, Katie Keita, for commenting on the Nasdaq’s proposal for ETF sponsors to pay market-makers.

I hope it’s a trend. Your stocks underpin everything else. These are your markets.

More on that later. But speaking of trends, yesterday the dollar rose and stocks fell. When the greenback gains on other major currencies, things valued in dollars often decline. Stocks are stores of value, and value ebbs or flows according to the measuring tape – currencies. The dollar fell in April (after an early buck spike garroted equities), so stocks rose proportionally. Then as April ended, the dollar strengthened on mounting global worries (especially from Europe). Stocks shrank. It’s a macro effect that trumps stories.

How should you view macro factors from the IR chair? “Macro factors” is jargon for “how appraisers view the global neighborhood.” There was a good article on the Big Picture (page R9, “How the Big Picture Affects Stock Picks”) in the Wall Street Journal Monday May 7. Writer Suzanne McGee says macro factors shouldn’t make investors reflexive but can’t be ignored either.

You’re not investing, of course. But you’re selling to investors. If your target market is influenced by macro factors, and you’re not, you may be striking discordant notes. (more…)

Dividends and Buybacks

Would you rather ride your road bike in the sun or the rain?

What if riding in the sun means peddling across Death Valley in the summer, while the rain is a passing shower in the Italian Dolomites?

Context is essential. Let’s apply the same thinking to decisions about stock-repurchases and dividends. Conventional wisdom has long held that both actions appeal to the kinds of stock buyers who hold securities and count on fundamentals.

No argument there. But ponder the third dimension in the IR chair. The first dimension is your story – what defines and differentiates your investment thesis. The second is targeting the kind of money that likes your story. The third dimension is the state of your equity store.

Your equity is a product, competing with other products, with unique supply and demand constraints. If you suppose that your story is correct for a particular buyer without considering whether the buyer can act on interest in your story, you’re leaving money on the table. So to speak.

For instance, if I want four Keith Urban tickets at Pepsi Center in October for no more than $50 each, I’m already sold on the investment thesis – “Keith Urban puts on a good show.” What if there are only two tickets available at $50? Well, I’m not the right buyer for the investment thesis, then. (more…)

Actionable

What does the word “actionable” mean to you?

It’s a decent name for a rock band, yes. But it means “what stuff can you do with this?”

Traders want actionable data – something to drive opportunity for profit. Investor-relations professionals want actionable tools – something that’ll improve stock ownership, share price, results of IR effort.

Knowing who owns your stock is good. But what actions can you take? Talk to sellers? That’s uncomfortable. Plus, unless you’re screwing up, selling is a compliment, an investment objective. The sellers should well buy again, when the time’s right. (more…)