A loyal group of long-term shareholders is every IRO’s dream. But if the investor base is highly concentrated, it creates its own challenges. That’s the situation at Iridium, the satellite communications company headquartered in McLean, Virginia, which offers global voice and data services. With the top 20 shareholders holding 70 percent of the stock, trading volumes tend to be low. This can put off other investors from buying in, especially those with a short time horizon.
Much of Iridium’s targeting work is about finding that next major institutional buyer, explains Kenneth Levy, vice president of IR at the firm. But the company is also focused on retail investors in a bid to improve liquidity. To support his engagement efforts, Levy publishes a regular IR newsletter that mixes industry and company news. ‘My goal is to have readers feel like it’s not a cold-call, but free information from a person they trust,’ he says.
Here, IR Magazine talks with Levy about targeting goals, boosting liquidity and doing IR in a niche sector.
What is your investor base like?
We have a very heavily concentrated shareholder base. Our top 10 shareholders own about 50 percent of the stock; our top 20 own 70 percent.
That is an enviable position – most IROs would love to make only 20 calls every quarter, rather than managing a larger pool of investors. For me, however, it’s a bit more complicated.
I have between 10 and 20 investors that have owned shares for a decade, so my challenge is finding a large, incremental shareholder that has the power to move the needle.
Most investors are unfamiliar with satellite firms. How does that impact your targeting work?
I have to reach generalist investors, which may need to get up to speed on telecom and, likely, have no understanding of satellite communications. Plus I need to keep them engaged or interested enough in our story to track our performance and invest additional time in due diligence. We have strong, free cash flow generation, so I need to understand whether that is a relevant metric for the analyst or fund I am targeting.
Finding the correct point of contact at a firm is often the biggest hurdle. It requires a lot of time and research. If that person hasn’t found me, I need to find him or her, which often it involves a lot of cold-calling or emailing with an enticing note to strike up a conversation.
Tell us about your IR newsletter and being an industry resource
I’ve instituted an ongoing IR e-blast in which I update investors on things going on at the company and within the industry. And then I annotate that with company-specific news articles. It delivers my information to investors’ inboxes. But they have to have enough familiarity with my name or our company to want to look at that email.
The e-blast can’t always be about my firm or what we’re doing. It can’t be patting ourselves on the back. It has to be relevant to the industry or sector. Sometimes I’ll pick things like the explosion of special purpose acquisition companies or the increasing democratization of space via low-cost launchers.
And then I’ll lead [the readers] back to our business. I always try to leave them with something that reflects positively on my company.
I want to ensure that, if people want to get up to speed on the space or satellite industry, I’m in the Rolodex as a credible person they can speak to. Even if they don’t want to buy my stock, the goal is to have them value my opinion, feel comfortable reaching out by phone and continue to receive and read my emails. Then, at the appropriate time, maybe they will buy the stock because it’s good value for them or has the right dynamics for their portfolio. I want to keep that option available.
This is an extract of an article that was published in the Winter 2022 issue of IR Magazine. Click here to read the full article.