What's your mix of investors?

When we meet with new clients, we often create a profile of the kinds of investors the company would like to attract. Institutional investors, including mutual funds, pension investors, investment banks, larger capital firms, etc. are always high priorities for a company; however, the ability and willingness of these players to invest in companies with small market caps, low stock prices, and lack of presence on a major exchange become limiting factors.

Nevertheless, as part of our long-term strategy of getting visibility for the company, we identify the most likely investors, based on experience investing in competitive companies, with the goal of beginning the education process. As an institution, they may not invest today, but putting your stock on the desk of any relevant portfolio manager and analyst may produce future opportunities for mergers, acquisitions and other investments.

Further, large institutional holdings that don't trade provide a solid foundation, but decrease liquidity. In a world where individual consumers increasingly are self-directing their stock plans, having a section of the float available for their trading is key to keeping the share price reasonable when they buy and sell.

So, what is your mix of investors today, and what do you want it to be tomorrow? Answer that question and you're stock price will ride a more even keel.

Getting on the radar screens of institutional investors is often an important step.

Is it time for an Investor Perception Study?

If your company has changed direction, in terms of products/services, target markets and/or sales distribution methods, do investors really know about it? If you're not absolutely sure, you may want to do an investor perception study.

Several years ago, we worked with a 70 year old company that had gone through a few transformations. With a market cap of $500M, solid financials and a strategic growth plan to get the company to a $1 Billion market cap, the question was what do the potential new investors think of the company?

We focused on institutional investors who were not yet participating in the stock or had only a small amount invested. We discovered that the overwhelming majority assumed the company was still in the same business it had been in for decades; they did not know the new directions the company had taken which offered substantially more growth. Moreover, the majority of non-investors, recognized the company's name, but thought it had been acquired years before by other large players in the industry!

As a result, we used a combined IR-PR campaign to reposition the company and scheduled meetings to gain the attention of the new investors we wanted to attract. By incorporating the new messaging into all documents, financial website engines, within 18 months the company was recognized for its new position and had doubled its market cap. Since then, it continues to maintain its new position and continues to grow!