A Framework for Investor Targeting

Investment profile of my company

The starting point of any investor targeting exercise is to build a solid understanding of how your company’s story can fit into criteria that global investors look for when screening for companies: liquidity, key fundamental metrics and non-financial highlights.

Things to consider:

  • Does my company’s liquidity, or average daily trading volume (ordinary shares and depositary receipts combined) meet institutional investor requirements? Minimum threshold for large institutional investors is on average $1million+ per day. Smaller funds or those focused on the mid-/small-cap segment of the market often have more flexibility, however also tend to have fewer resources and less support (corporate access, investment research) from brokers.
  • Compared to the regional and broader EM peer group, which set of fundamentals particularly stands out in my equity story?
  • How are we positioning our collateral to address the needs of investors with particular strategies (e.g. Income/Yield, Growth, Value etc)? Do we have a good understanding of the triggers of the investment decision on those funds?
  • What are the key non-financial metrics that matter in my story? What macro- or mega-industry trends is my company’s equity story continually benefiting from?

Opportunity Analysis

Many companies take a technical, if not scientific, approach to identifying investor opportunity. A starting point is to conduct a comprehensive analysis of your own shareholder base, factoring in significant movements over the past four quarters.

Next, an institutional investor study draws up a target investor groups based on a number of criteria:

  • Investors who are already present in my shareholder register
  • Investors who are invested in my peer group but not in my company
  • Investors who have held my company’s shares previously but do not currently hold them
  • Investors who have been increasing allocations to my region and/or my sector
  • New EM funds launched globally over the last 12 months
  • New ideas of investors from brokers and other consultants

Things to consider:

  • Do I have a clear understanding which investors with active mandates hold my regional and international peer group? How often am I monitoring changes and activity in this list? Are the changes in line with what we are seeing in our shareholder base? If not, what are the drivers of the outliers?
  • Am I monitoring developments in the passive and ETF industry and do I understand which benchmarks my company is part of? What are my company’s allocations to each of those indices?
  • How often am I monitoring broader fund flows into my region and comparing this to what we are seeing in my company’s shareholder base?

Segmentation

Following this, companies often group investors into tiers, which then dictate the outreach strategy for the year. For illustration purposes the following example may be helpful:


All investor tiers have access to ‘passive channels’ which include IR website/web casts, annual report, IR mailings / press releases, IR events (R&D day, etc.), quarterly conference calls, event-driven/product conf. calls, phone & email contact with IR

The study can then be applied to three key geographies: Europe, North America and Asia.

884 thoughts on “A Framework for Investor Targeting”

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