Obvious? I Wish.
20 February 2009
I recently came across an analyst research report that simply stated the following:
“We are suspending coverage on <<anonymous company name>> as we have been unable to access management to discuss developments at the company. Our previous ratings and fair value opinion are no longer valid.”
So, let me get this straight – an analyst is covering your small cap company and wants more information about your company so that he can get more investors to buy your company’s stock.
Sounds like an important stakeholder to me.
Unfortunately, he can no longer cover your company because he can’t get enough (or any) information from you about the company. You won’t return his calls and emails and you won’t meet with him.
Hmmm. Not exactly a recipe for success when it comes to IR.
Not only should your company be talking to sell-side analysts, you should have a regularly updated strategy of how to effectively engage each analyst that covers you (or may cover you).
An Investor Relations Officer (IRO) once said to me – “We don’t speak with that analyst. He doesn’t like us.” This may sound ridiculously obvious, but, that’s not the kind of analyst engagement strategy that leads to an effective IR program. I wish these kinds of statements from IROs were rare….but they’re not. They are actually far too common.
No matter what the size of your company is, you need to get your analyst engagement strategy in order. In most cases, you need them more than they need you!