As much as CEOs and CFOs know that they should focus on the long-term performance of their stocks, it’s impossible not to at least notice and wonder about day-to-day, hour-to-hour fluctuations, especially when they seem arbitrary and divorced from fundamentals.
Trading before the market opens and after it closes can be particularly confusing. For instance, outside of the regular market session, spreads can widen dramatically (see chart).
The Division of Corporation Finance (the Division) is a branch of the U.S. Securities and Exchange Commission (SEC) that supports the SEC’s mission to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” Among its duties, the Division “provides interpretive assistance to companies with respect to SEC rules and forms and makes recommendations to the Commission regarding new rules and revisions to existing rules.” This duty is performed, in part, through the issuance of Compliance and Disclosure Interpretations (or “C&DIs”) on a variety of subjects.
In the world of small-cap healthcare, we have observed that the class of asset managers who are collectively referred to as “hedge funds” are often viewed negatively by executive management teams, particularly those that are new to the public markets.
This tendency is understandable in light of the fact that hedge funds, as a whole, most often attract media attention when they’ve disclosed a sizable position in a company with activist intentions (“corporate raiders”), or when they’ve come under the scrutiny of regulators. These high-profile examples distort the public perception of hedge funds overall.
A well-run Investor Day can be an incredibly valuable part of your investor relations strategy. It’s a great way to cultivate relationships with existing investors and covering analysts, and to introduce/enhance prospective investors’ and analysts’ understanding of your story.
Timely and strategic planning are integral to hosting a successful event. Drawing on our many years of attending and participating in Investor Days, we can be a valuable resource as you prepare for yours.
The day you report earnings is obviously crucial, and even veteran IR professionals frequently botch them — sometimes due to poor preparation or just nerves. This week and next, we’ll offer tips to help you de-stress the event and execute it flawlessly — beginning today with four pre-call tips to help you get ready.
When it comes to investor relations (IR), remember that your company’s Internet presence often makes the first impression. In today’s frenetic capital markets environment, potential investors will often use your corporate website to quickly understand the fundamentals of your business before they decide to allocate time to a meeting with management.
The primary purpose of having a corporate website, of course, is so that you can easily share your company’s “story” with the marketplace. In order to be effective, the story must be communicated thoroughly, accurately and consistently across your website and all of your digital media, in a way that is easy for visitors to consume, understand and navigate.
Bookrunners play a significant role in the execution of a successful IPO transaction. Too often, though, a private company CEO does not fully appreciate the importance of selecting the right bank(s) to lead their IPO. It is vital to find the bookrunner(s) with the right combination of capabilities, experience, and “fit.”
Here are seven key considerations for evaluating potential bookrunner(s) for your IPO:
You spend considerable time creating a professional investor presentation that tells a comprehensive story of your company. Yet aside from the analyst/investor due diligence meeting, few opportunities exist for you to deliver the entire presentation from start-to-finish. How, then, can you tailor your presentation to the time and opportunities at hand?
Let me give you a brief overview of the most common investor encounters, the opportunities and challenges they bring, and what you can do to prepare. I’ll also share some strategies to help you leverage your investor presentation to articulate a compelling story in time-sensitive situations — one-on-one and small group meetings at investor conferences, the investor conference presentation, and even the quick chance encounter that can happen anywhere.
An investor perception audit – a formal survey of buy-side investors and sell-side analysts, typically conducted by an independent third-party – has become part of the standard investor relations activities for many public companies. Done properly, a perception audit should highlight the good, the bad, and the ugly about a company’s IR efforts and its reputation on the Street. While many companies shy away from asking the tough questions, we would encourage companies to seek both positive and negative feedback, and to actively address any concerns that are raised.
In a 2007 survey of over 3,000 companies titled, Perception Studies: What are They Thinking?, the National Investor Relations Institute (NIRI) found that the majority of respondents surveyed had conducted perception audits. Of this subgroup, 92% said that they use perception audits to determine the extent to which their company’s strategy was understood and 78% noted that perception audits were useful when refining corporate messaging. Here are some other reasons why you should consider a perception audit:
- Measuring Effectiveness: Perception audits are great for measuring the effectiveness of IR practices. Your corporate strategy may be on target, but aspects of it could be getting lost in translation when you communicate with the Street. An audit can highlight ways to improve your corporate messaging and to market your business more successfully.
- Assessing Disclosure Levels: Understanding what investors appreciate in your disclosure and where you have the opportunity to be more transparent can be key. Importantly, determining how relevant your metrics are to the Street can be helpful as you craft your financial message.
- Management Perception: Audits can be a valuable resource for the board of directors to use as an objective analysis of management as well as a vehicle to collect feedback on the management team’s credibility and reputation on the Street.
- Audience Segmentation: A well-structured perception audit will allow you to identify differences in perspective, sentiment, or expectations between the buy- and sell-sides, between current shareholders and non-shareholders, and between the largest buyers and largest sellers in recent quarters.
- Investor Day Preparation: Perception audits can be used to help plan an investor day, providing you with an objective roadmap of what subjects to focus on, what information to present, and how to make the day as productive as possible.
- Building Credibility: The investment community values being asked for its opinion and views conducting a perception audit as an indication of the management team’s interest in improving.
On April 2, 2013, the Securities and Exchange Commission (SEC) issued a report that outlines how companies can use social media outlets to disclose information and remain in compliance with Regulation FD. The report was the result of the SEC’s investigation of statements made on Facebook and Twitter by Netflix CEO Reed Hastings, where he announced a “viewing” milestone for his online movie and TV rental company. While the investigation centered on whether Hastings violated Regulation FD, Hastings has maintained that his disclosures were neither material, nor exclusive.
From my vantage point, while the SEC’s new report opens the door for companies to disclose information via social media, it’s only propped open a crack and not enough that I’d encourage every company to use social media for this purpose. For one thing, a company is compliant only if it has previously communicated to investors that it plans to use certain social media outlets for news and information, and if access to these social media outlets is unrestricted. Following is more information about the report, what it means for your company, and what the risks are for communicating material information via this means:
What has changed?
The use of social media outlets is now included in the SEC’s interpretive release (34-58288), which in 2008 allowed company websites to be used to make disclosures under Regulation FD. The appropriate use of social media, like websites previously covered under this release, is the responsibility of the company. Websites and social media must be used according to the following rules:
- They must be recognized as a channel of distribution of information to the market
- They must be a source of broad dissemination to the market
- There has to be a reasonable waiting period for investors and the market to react to any posted information
What does it mean for your company?