Buy-Side Activity

23 November 2007

The “buy-side” is a term used by the investment community that refers to investing institutions such as mutual funds and pension funds.  They often are the largest shareholders of publicly traded companies.Waiting_for_a_call_2

How actively a buy-sider interacts with a particular company is an interesting topic.  Some are very active in communicating directly with the companies they own (or are thinking about owning), while others hardly ever communicate with the company directly.

Why the disparity?

There are many reasons why the buy-side may not want to speak directly with a company, but here are the top two:

1) The buy-sider has a strong relationship with members of the sell-side (analysts) and would rather talk to them to get a more independent point of view.

2) The buy-sider simply does not see value in contacting the company directly.  Unfortunately, this is too often the case.

When communicating with the buy-side, IR (including company management) needs to be strategic, timely, trusted, respected, and valued!  Anything less and the buy-side simply won’t bother calling the company.

It’s as simple as that.

 

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