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What Makes for a Successful Investor Relations Program?

By Dennis Walsh, Senior Consultant & Director of Social Media

In many of the StreetScope® perception audits we conduct, we often inquire about what makes a successful investor relations program. Is the Street satisfied with the level of outreach? Is there something specifically a firm can do to enhance its communications? Being the investor relations enthusiast that I am, I’m always hoping to discover an innovative idea that we have yet to implement.

However, more often than not, the responses are all pretty simple. Wall Street wants access to management. They want informative answers to their questions. Many even want an investor day that describes the company’s long-term growth strategy. So old-fashioned (I jest)! What about having an active Twitter/StockTwits account (follow me) or Facebook page, a cool management video or an interactive annual report?

Recently, we surveyed a sampling of buy-siders, asking “What qualities and activities do you believe are most important to the success of a company’s investor relations program?” The word cloud below depicts the frequency of the various responses received. Availability was the clear winner.

Echoing the responses to our previous perception studies, Wall Street believes that in order for a company to have a successful IR program, management must be accessible and the IR team should be responsive and well-informed.

Here are some excerpts from the responses:

“Very clear and honest communication with investors about the long-term fundamental outlook for the company's business.” – buy-side portfolio manager ($129B AUM)

“Honesty, availability, consistency are primary considerations.” – buy-side director of research ($196M AUM)

“Direct answers that inform the investor about the intricacies of the business…” – buy-side analyst ($26B AUM)

“IR people who return phone calls promptly, know the business and answer questions in a straightforward manner.” – buy-side CIO ($78M AUM)

“Provide investors with a compelling reason to own the stock, not just convey a lot of data that one can easily refer to on the website or annual report. Be upfront if there is bad news on the horizon and not try to gloss over negative information.” – buy-side portfolio manager ($375M AUM)

“Open communication and an update of all long term goals on an annual basis at a setting hosted by the company…” – buy-side CIO ($180M AUM)

Everyone in the IR field today knows that corporate access has grown significantly in the past few years and that management should be out speaking with investors in good times and bad. And, returning phone calls and providing informative answers to shareholder questions should be a no-brainer.

But what about all this other stuff we hear about? Every day, someone (myself included) is touting the benefits of using social media for investor relations; effectively using video to communicate messages to shareholders; expanded website disclosure, etc. In fact, one respondent referenced the company website as a factor:

“A well organized website.” – buy-side analyst ($4.2B AUM)

So, are these new trends in interactive communications not important to add to your IR program? While we continue to hear that Wall Street is resistant to social media, they are still worth your attention, but you must remember to not lose focus on the foundation of investor relations: being accessible to shareholders and effectively communicating corporate messages in a timely manner. Many of the new interactive tools available today are a great way to support your IR program and enhance your team’s efforts to be more available, responsive, transparent and informative. Today, you must enable your audience to receive news in the manner in which they choose, otherwise, they may not get it at all. Now, if you’ll excuse me, I’ve got to go finish fulfilling requests for printed investor kits before the post-office closes.

Dennis Walsh is Senior Consultant & Director of Social Media at Sharon Merrill. He counsels clients on a broad array of investor relations and corporate communications issues such as market research, competitive intelligence, earnings announcements, investor targeting, road show planning and social media.

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