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Investor Audits: Measuring Awareness & Perception
Objectives
Maximize shareholder value by determining whether prospective institutional investors are aware of the segment and the company and how existing investors perceive the company’s investment thesis and outlook
Program
The Ruder Finn Investor Relations Group:
- Identifies existing and prospective institutional investors in a client’s, targeting those most likely to provide pertinent feedback in a telephone audit.
- 20 to 25 buy-side investors and sell-side analysts are interviewed according to a discussion guide agreed to with management. Anonymity is assured to the participants to assure their candor.
- Open-ended questions can cover a broad array of topics and are usually focused on current issues, such as:
- Operating results & outlook
- Clarity of company strategy and progress in implementing it
- Recent major developments—acquisitions, restructurings, executive changes
- Perceptions of management & the Investor Relations function
- Drivers behind stock activity and differences from peers
Results
Audits have helped clients:
- Identify lack of understanding of or weaknesses in the investment thesis, competitive positioning, or progress toward attaining business strategies [basically, the company’s SWOT from an investment perspective],
- Demonstrate that a major strategic move may have been sound in concept but poorly communicated to the Street,
- Uncover the reasons why the stock is trading at a discount or premium to peers,
- Assess the value of a change in dividend or stock repurchase,
- Understand why an institutional investor decided to buy or sell the stock,
- Assess an Analyst Day, investment conference appearance, or series of meetings with investors,
- For IPOs, demonstrate that listing on one particular stock exchange would be more beneficial than on another.
