Tagged: Targeting

Showing Up

Investor-relations professionals are traveling salespeople.

Now, we’re not paid commissions and I can see some of you recoiling at the imagery of rumpled suits and satchels stuffed with brushes, a voice saying, “Excuse me, ma’am, do you have a couple minutes?  I’d like to tell you about our brand new…”

Woody Allen said 80% of life is showing up when you’d prefer to stay in bed. Ads play on satellite radio claiming 80% of sales follow the fifth to twelfth contact.  Whether those figures are real, my own sales experience boils down to a single word: Effort.

There’s an article today in the Wall Street Journal about venerable stock-picker Mario Gabelli whom many of us know because of the ponderous way Gamco Investors approaches investment-selection. You can’t quit after the first meeting.

When I was sitting in the IR chair years ago, the sales guy from CCBN – later bought by Thomson Financial and today part of Nasdaq Corporate Services – sold me more stuff than everybody else combined because he was always solving problems for me. He’d observe a need and say, “We could help you do that better.”

I’ve said before that Nordstrom has the best salespeople in retail because they’re concierges. They’re expert at assessing their consumers and matching them with the right products. They’re the unflagging herald helping you pursue sartorial superiority.

This too is the soul of modern investor-relations in a world where our core audience of active stock-pickers shrinks steadily, money like desert sand before the wind blowing to indexes and ETFs. Mario Gabelli despite good performance has seen $2 billion flow from Gamco this year.

IR is about matching product to consumer. We can speak in magisterial terms of the Liaison to Wall Street but at root IR is corporate concierge. We’re Nordstrom for Fidelity or T. Rowe Price, helping them dress well.  And everybody is looking for a garment because that’s what Wall Street does. Fund managers spend other people’s money.

Let’s get right down to handing out Fuller brushes. Say you’ve positioned your company as a growth story.  You craft a growth message, pinpoint growth drivers.  Every quarter you’re delivering financial and performance metrics highlighting sequential and yearly change, percentages metering growth.

But your stock is declining for whatever reason (and we’d know in market-structure data by measuring period-over-period change in behavioral flows no differently than you do with your metrics). Maybe it’s China, the sector is out of favor, the dollar is killing you.

The fact is you’re a value product.  Target growth money when your shares are declining and you won’t sell because the product doesn’t match the consumer. Growth money buys appreciation. Value money buys opportunity. Repeat that.  And there are shades of both. Momentum is aggressive growth money, deep-value high-turnover is aggressive value money. GARP (growth at a reasonable price) is your consistency constituency (say that fast three times).

Every IRO should be cultivating a deep palette of investor-relationships across this money spectrum. These are your consumers. You follow up – knock on doors because 80% of sales take a lot of persistence and if the stats are bogus effort isn’t – with the consumers currently matched to your product.

We produce data for prioritizing this relationship-management effort.  Our action items focus on relationship-management. For instance, you have a tough earnings call and your stock declines. Afterward, you ring top holders and reassure them. It’s protocol.

But wait with the salvo to well-informed prospects you’ve cultivated strategically. Watch the data. When your Sentiment is negative – all the tides of money are out and your short volumes are low – the likelihood your price will rise is high because the first buyer will lift price.

That’s the time to call just your deep-value relationships, the 4-5 you’ve built the past couple years. You have a product to offer these consumers. Highlight value drivers – not growth details. Tell a value story.

If they act, they’ll get an immediate return (call them next only when your product is right for them, and this relationship will become symbiotic).

And now you’re a growth product and story again. Call GARP and growth relationships because your shares will be rising. That’s what you can control. Turn it into an art.  You’ll be the best IRO on the Street because the goal is a well-informed and fairly valued stock (we have metrics for that too).

Remember, 80% of success is showing up. Over and over.

Streetwise IR

“We’ve got 25 analysts. What new thing can we say to change investors’ minds?”

So lamented the IRO of a large household name this week. If everybody knows the same thing everywhere, how can you distinguish yourself? Tone of voice? Outfit? Teeth-whitening?

We live in the Age of When. It’s not what you know, but when you know it. For instance, Elmore Leonard died yesterday. I read nearly every book he wrote and my bookshelves before Kindle gave me one-finger page-turning were packed with the paper pulp Leonard crafted so artfully, redefining snappy street dialogue in fiction. You should read one if time permits. Cuba Libre is a favorite.

Word first went in a Tweet from his publisher that Leonard had died – which then spread around to media outlets and a New York Times alert that landed in my email spam folder.

WHEN has replaced WHAT. It’s a lesson for IR. If you set a goal to change your shareholder base by incorporating more value money, you’ll succeed if it precedes a crushing collapse in business fundamentals that routs growth holders, followed by a focus on cost controls and core drivers. (more…)

Targeting Today

EDITORIAL NOTE: This edition of the Market Structure Map ran nearly a year ago, on May 30, 2012, right ahead of the NIRI National Conference, the IR profession’s annual gathering. We’re at NIRI again now, in sultry south Florida with our professional compatriots conferencing at the Westin Diplomat in Hollywood.  After spending several hours at the ModernIR booth, this still seems apropos. Catch you next week.  -TQ 

“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.

Next week the situation might be wholly different. A growth story might indeed be a growth stock. Or a GARP stock. Stock and story are not the same, any more than summer and winter clothing at your favorite retailer are hot items simultaneously. Sure, it’s all clothing. But context matters. Got a tough environment? Inventory to move? You’re a value story. (more…)

The Answer

If you won the lottery, what would you do?

What about the IR lottery? If you could have anything you wanted, know any detail, command any price, possess every tool, what would you most wish for in the IR chair?

It’s a darned good corporate gig, as corporate gigs go. You could say, “I’d like to be CEO.” That’s a fine aspiration and I hope we see more folks move from the IR chair to the head of the boardroom table. About the only thing the IR department wants for – given how strapped it generally is for staff – is time managing people. But it covers every other thing, from operations, to strategy, to financial performance.

Would it be better targeting tools? I’m long removed from the grunt work of building the shareholder base, but I’ve done it. Story and audience – investment thesis and shareholder profile – never go out of style. If you could have the best targeting list, so good the Justice Department would subpoena it if you were a news reporter…well, that would be nice.

How about the skills for writing the perfect earnings release? Say you could hire some great writers. Merge the alkaline prose of Cormac McCarthy with the verve and sass of Jim Harrison and the poignant pacing of Alice Sebold. Your press release would be the talk of Wall Street. No Country for Old Men, The Great Leader, and Lucky, rolled up with financial statements and a GAAP reconciliation. Analysts would hang on your every perfectly turned phrase. (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…)

Influencing behaviors in your trading

In politics, Bill Clinton perfected the “trial balloon.” You float an idea of one shade because you’re planning on getting people to embrace an idea of another larger construct.

In fiction writing, authors will create portent by ending a chapter with something like: “She could never have imagined the consequences of her decision.” You can’t wait to turn the page to find out what she couldn’t imagine. The writer has subtly influenced your behavior.

The Fed is always trying to influence our behavior. Market performance October 4 (today) was mostly about Fed influence. Affirming commitment as lender of last resort – which sounds good but means “we will print endless piles of cash” – is the same as devaluing the dollar. So the dollar plunged in the last hour of trading, and stocks soared. (We all want stocks to rise but think about a teeter-totter. That’s stocks and dollars.)

In trading markets, exchanges continuously toy with behaviors by changing the spreads between fees for taking shares away and credits for bringing them to sell (this is the root cause of high-frequency trading). Exchanges are influencing behaviors.

Why does it matter? IR is about influencing behavior. In the past, we did it mostly with operating results, investment thesis and investor-targeting. Today, it must go further. Do you consider the impact of Fed policy and adapt your institutional outreach to match your investment thesis to impending changes in behavior? You should. If programs stall, don’t keep talking to growth money; shift to high-turn, deep-value money. (more…)