Today, investor targeting takes many different forms, from new Big Data tech tools to more traditional methods, such as a focus on investment style or peer analysis. Now, IR Magazine has revealed just what it takes to get an investor to take a position.
Some companies say they ‘don’t do targeting’. And if you’re a one-man IR show, with stretched management, it’s easy to see why: just over a fifth (22 percent) of new investment targets will end up taking a position in a company, according to IR Magazine’s Investor Targeting report, published earlier this year. And it takes an average of between four and five meetings with targets before they take up that position.
But there are regional and cap-size differences at play. For example, in Asia, a quarter of investment targets result in a stock purchase. The process is, however, also more extensive for Asian firms, which typically hold almost eight meetings with targets before a position is taken. This means that while more targets in Asia result in stock purchases, Asian IR professionals have to work twice as hard as their North American and European counterparts to seal the deal.
Of course, what the averages don’t dive into is what’s involved in deciding which meetings with which investors are likely to get you the results you want.
For Marisa Jacobs, global head of investor relations at US shoe manufacturer and distributor Crocs, keeping track of ‘every single interaction I have with the buy side, whether it’s a phone call, an email or a meeting’ means that whenever she wants to know whether anyone she has spoken to is a shareholder, or whether she has spoken to potential investors multiple times and they haven’t become a shareholder, that information is easily available.
‘And I do take that into account,’ says Jacobs. ‘If an [interested party] is an active shareholder, and I can facilitate a meeting, I will. And if there is [an investor] that I’ve spoken to two or three times asking for a meeting, I will certainly give it the meeting because I see that as a sign that it is truly interested in Crocs and is still considering and analyzing what to do.
‘But if I’ve spoken to people four or more times and they have never taken a position, I do start questioning why we’re having those conversations and whether they are using a conversation with me more as a way to get data about the industry and other companies in the industry. I begin to question whether they’re legitimately interested in Crocs.
’The process is, however, very much a subjective one, explains Jacobs. ‘How do you know when to draw that line?’ she asks. ‘I don’t have a hard and fast rule, because I also take into account the institution, its holding periods, whether it is a hedge fund or a long-only and how much importance I place on having that institution become a shareholder. You really need to take into account all of those different factors – plus what you know about the individuals themselves and what their decision-making styles are.
‘It definitely isn’t as simple as drawing a line in the sand and saying, Well, if they haven’t bought after three meetings, I’m not going to talk to them.’
The full Investor Targeting report is available to IR Advanced and IR Intel subscribers to IR Magazine and can be found at IRmagazine.com/reports-library.
This article was published in the Winter 2019 issue of IR Magazine.