Investor Relations: Don’t Lose Sight of the Basics
Abe Wischnia, APR
President
Abe Wischnia & Associates
In the current stock market climate, investors are feeling pressure to sell stock, even of good companies. They will sell the shares of companies whose earnings are meeting the Street’s forecasts, if only as a defensive move to avoid possible losses.
Your shareholders want to believe that they made a smart investment in buying your stock. They want to believe in the company’s products and management. You need to pay as much attention to keeping the support of your current shareholders as you do to bringing in new ones.
In difficult situations, when it’s hard to know what to do, it can useful to get back to basics. For example: In difficult times, communicate more, not less.
Now, more than when times are good, your shareholders want you to communicate with them. However, they will be expecting much more than “business as usual” communications. They want information but they also want reassurance.
Communicating more with shareholders doesn’t necessarily mean putting out more news releases. If you don’t have real news, don’t try to make some up just to pump the stock. That gets companies in trouble and deepens shareholder cynicism.
If you do have news, even something minor, you can use that as an opportunity to include a business update as part of the news release.
There are many other ways to communicate with shareholders. These include blogs, videos, webcasts, Tweets, conference calls, newsletters, emails, phone calls and shareholder meetings.
It’s comparatively easy to use your website as a key investor communications tool with content that goes beyond static information. For example, posting webcasts of presentations can enable all investors to see the same presentation that the CEO or CFO gave at an investor conference. Archived on the company website, webcasts can remain available to current and potential shareholders. They can also be easily removed or updated as the business progresses.
A growing number of companies are having success with CEO blogs. Think of the CEO’s blog as a form of a news release that uses more conversational language. A blog, appearing once monthly, would allow your CEO to provide additional detail and color about the company’s business and announcements as disclosed in news releases. The CEO can communicate in a less formal, more personal and more conversational way than in a news release. Just make sure the blog text gets the same review and vetting that you use for a news release and file an 8K.
At a minimum, update the “Frequently Asked Questions” page to reflect the actual questions shareholders are asking now.
There is another very effective communications tool that is often overlooked, perhaps because it’s too low-tech. It’s the telephone. Are you using it effectively in your shareholder communications? Does your company have a knowledgeable, sophisticated, articulate, and reachable person available to take shareholder calls? If shareholders call with questions or concerns, is there someone who is fully informed on the company’s operations, business opportunities and challenges, who understands and can explain your financial reports, who really knows what he or she is talking about, to take or return the calls?
Make it easier for shareholders to reach you by publishing your investor relations phone number on news releases, on the company website and in the annual report. Include the name of the investor relations officer so shareholders know who to ask for.
Too many companies don’t do this. They only return the calls of the big shareholders, analysts and portfolio managers. Don’t play favorites. Take and return the calls of all shareholders, regardless of the number of shares they hold.
To avoid trouble, as you communicate with investors make sure you adhere to both the letter and intent of Reg. FD to give everyone equal access to material information. Again, don’t play favorites.
If there are problems, don’t try to deny or hide them. Instead, acknowledge them and help your shareholders understand what the problems are and what you’re doing to solve them. This can be effective even when the company is doing well, showing investors that there is potential for even more growth once those problems are fixed.
Don’t make promises you can’t keep. Shareholders will remember them and your promises will be available for all to review in internet databases and discussion boards.
Use your shareholder communications to set realistic expectations. Help shareholders understand what your are doing, why you are doing it, where the company is going, what it will take to get there, and why you believe you will be successful. But it’s just as important to be upfront about the risks and uncertainties. If shareholders have realistic expectations, they are less likely to sell when times are tough.
As you develop your investor relations strategy and execute the plan, don’t lose sight of the basics. At Abe Wischnia & Associates, we make sure you have the basics covered. Then we apply our knowledge, experience and creativity to help you move beyond the basics to really communicate with the investment community.
