INVESTMENT COMMUNITY PERSPECTIVE

Some time ago I wrote an article entitled Drinking from the Fire Hose, which described how investors are drowning in information. There are always seemingly good legal reasons for providing more information and if the investment world included just one company, reams of information would be welcomed. However, the investment world involves thousands of investment choices; ironically, information on thousands of companies often drowns investors in detail, as they just cannot process it quickly enough. Presumably, if everyone knew everything, great decisions would be made and losses would be avoided. That scenario sounds great but it is just not reality.

Cutting back on the volumes of information is not an option, as there are regulatory requirements to be met. (Since regulations tend to grow, not contract, I predict even more information will be supplied in the future.)

So how can an IR professional help the investment community, while meeting regulatory requirements? Along the way, I have come across some great solutions to help bridge the gap between information overflow and providing investors with great, timely information.

A Great Website

First and foremost, focus on providing a great corporate website. The IR requirement may be differ from a customer and product website, but the two should be linked. This is where a history of the company and its industry can be found, including historical financial information. Basically, if someone wants to learn about the company and the related industry, this section of the website would be the starting point. I’ve reviewed many websites and found that few provide great industry information. Note also that key industry terms, measurements and ratios should be defined and explained, with examples given. If there is not consensus in the industry, you may want to start an industry association to obtain consensus. If you are a leader, you are more likely to influence than if you are a follower. The corporate website should be every investor’s starting point – so make it worthwhile.

An Excellent Press Release

A few companies have come to the realization that during reporting season, analysts and investors are inundated with information. The press release is kept short, with key information provided and a link to detailed information. A good company will know what the Street is expecting and highlight in the press release any deviations from expectation. Press releases should meet the requirements of knowledgeable investors, as well as providing newcomers with information needed, or indicating where they can find it fast. And make sure that the related information is available when the press release is issued. The bottom line is that there should be no need for 40-page press releases.

An Analyst/Investor Package

More and more companies are preparing an analyst/investor package, providing key statistics and operational history, along with explanations, in a simple and consistent format. This package effectively pulls out key information that is found in the MD&A, but is organized in a simplified manner. If a company normally provides greater detail than is presented in the financial reports, do so in the analyst/investor package aimed at servicing the knowledgeable investor.

An Investor Call

A conference call with the relevant executives is an important tool. The company can speak to what it believes were the important aspects of the quarter and then answer questions. Some companies have separate calls for the press and retail investors, where the focus may be different than that of institutional investors and analysts.

A Follow-up Call

Few do it, but a follow-up call a day or so later is often extremely useful and helpful – not just to analysts but to key investors as well.

As an analyst I use all of the tools at my disposal, but the one I appreciate most is the Analyst/Investor package. Some of these are more detailed than others, often owing to the size and complexity of the organization, but all are extremely valuable. These packages help me zero in quickly to update my models and identify variations from expectations. For companies that produce them, they are a little extra work at first, but become very streamlined with practice…and they help me drink from the fire hose.