Andre J. Peschong

IR is a basic absolute for a company even considering being publicly traded. With all the costs associated with being a public company such as SOX compliance, legal, accounting, transfer agent fees, listing fees etc…  Why then would a company want to cut back or not have a full effort to effectively get the story out to investors, shareholders, and the institutional market? 

Any company that is going to be publicly traded needs to have an effective campaign, complete with a budget, responsibilities and a basic sense of a preferred outcome.  IR and or PR are as necessary as a website to any public company.  Now the important question is how, with over 24,000 publicly traded companies, does a company differentiate itself?

IR strategies come in many forms and flavors and those change over time but what this market currently demands from an IR group is old fashioned relationship building.  With all the electronic communication that is currently available IR groups are losing the art of the relationship whether it is with an investor, fund manager, broker or analyst.  Having worked as a broker, investment banker and fund manager I have a fair amount of background over the years on what works and what does not.  IR groups need to demonstrate a clear understanding of the client companies business and be able to eloquently and efficiently relate that to the person or group they are speaking to.  The story must be concise while showing the companies benefits and then relating that to the creation of value and why someone either institutional or individual should take a position.  There is always a liquidity issue which brings in the potential for wild price swings but if in fact the IR person can get the investors to take a position and not just trade the company’s stock then that is where, slowly but surely value can be created.

All fund managers and institutions regardless of focus or size have a discretionary portion of their portfolio that can be allocated towards ideas that make sense.  IR groups need to understand the value proposition that the client company has and relate that effectively to these buyers.  In essence IR people need to be extremely well versed and researched in the client companies industry so that they can have intelligent conversations with key potential investors while building a relationship. 

There is no magic bullet as to what works and IR people need to be very cognizant of management’s time they can allocate to doing interviews or attending conferences as they still need to run a business.  I believe select conferences can work for smaller tier companies such as the B. Riley Investor Conference as well as the Roth Capital Conference.  Another excellent venue for smaller companies looking for key exposure is the NIBA Conference (National Investment Bankers Association), although a company needs to have a member sponsor them.  All of these conferences are fertile ground for a company to present their story and for the IR group to make sure it is followed up on with personal contact.  There are many websites that tout exposure and may have a small following but generally those sites will not garner substantial credibility or long term shareholders and they are typically very expensive.  One of the last areas for credibility is the analysts.  While most smaller cap companies have a hard time getting coverage there are some interesting alternatives such as pay for services.  Most of the pay for analyst services is really just expensive poorly written pieces but there are a few groups who do an extremely good job and are worth the cost.  One group who actually has a good following with the smaller to mid tier brokerage firms is JM Dutton & Associates.  Their reports are institutional quality and are getting picked up on the street from brokerage firms.

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