A menu of IR reference sources
Specialized work requires specialized tools. IR's status as a specialty is proclaimed by all the IR practitioners who are now actively reaching out to attract investors, sometimes on a full-time basis. This kind of prospecting is not pick and shovel work, but it does require an IR toolbar.
One of the challenges in maintaining an effective IR toolbar is to keep up with new and changing information. In the US, over 170,000 new businesses are formed each year and over $100 bn in new stock is issued in public offerings. During the last few years, the volume of stock sold and traded on a daily basis has regularly exceeded half a billion dollars in value. Corresponding changes are also taking place within the securities industry. The increasing significance of institutional investors, for example, has resulted in many cases of merging and restructuring in financial services. It is imperative that directories used for IR purposes be replaced regularly, unless of course they are provided online and kept up-to-date by their providers.
Company information
Finding out about competitors and investment peers is a first step. Hoover's Online provides free access by company name or ticker symbol to over 13,000 company capsules. More detailed financial information from Hoover's is accessible through subscriptions to various online services, while access to the complete Hoover's database requires the purchase of an online licence. Other authoritative directories of company information are provided by Moody's and Standard and Poor's in a variety of formats.
The SEC's Edgar, an electronic filing system and database, has been fully operational since 1994, with easy retrieval of annual 10k filings and quarterly 10q reports, among others. Not only is Edgar a way for a corporation to get to know its investment peers and competitors, the 13f reports filed by major institutional investors can be used as a way to shortlist potential investors.
SEC filings can also be accessed together with other company information through the Lexis-Nexis compendium of databases, which are actually larger than the entire world wide web. A company search will simultaneously turn up 10k and 10q reports, company profiles, and business news abstracts. Subscribers have a choice between web or dial-in access, the latter requiring some training but guaranteeing more security.
Financial analysts
Nelson's Directory of Investment Research supplies financial information for over 20,000 companies worldwide, along with the list of analysts publishing research on each one. Volume I covers US companies and volume II covers non-US companies, with each volume subdivided into a company section and a research firm section. The index provides a breakdown of 9,000 financial analysts by industry and firm. The whole kit is also available electronically.
The Association for Investment Management and Research is another source for information on analysts. The AIMR web site has contact information for any one of the analyst societies or chapters throughout North America, and a comprehensive list of all members (now about 28,000) is published in a membership directory. Analysts are listed alphabetically within a breakdown by city. The entry for each analyst includes firm affiliation and industry code.
Buyside magazine highlights a few industries in each issue along with roundtables of analysts covering them. Archives are stored on the web site, with options for 'free research reports' and 'research profiles' on the main menu. The 'public companies' option provides links to company home pages, annual reports, and press releases.
Where there is interest in locating the very best among analysts, as for large cap companies, Institutional Investor special issues can be great tools. The all-America research team issue in October comes with a subscription to the Americas edition, as does the Latin America research team issue in June. Institutional Investor also details an all-Europe research team in February and an all-Asia research team in April for international edition subscribers, and any of the special issues can be bought individually. A new development is that the research rosters are now on the Institutional Investor web site with free access. The influence of these lists now stretches to analysts' salaries.
Brokers
Though Nelson's Directory of Investment Research covers many brokerage firms, there is more extensive coverage in Standard and Poor's Security Dealers of North America. It includes 12,000 brokerage firms arranged geographically, and is available in electronic or print format. Targeting individual brokers, however, can be quite challenging. Many of them operate independently and must become known through direct contact or word of mouth rather than through directories.
Institutional investors
For IROs to target institutional investors, tools are needed to determine their size and their approach to investment as well as to determine who is making the buying decisions. Vickers Directory of Institutional Investors is drawn from 13f reports and other data from over 4,000 institutional investors, with separate alphabetical listings for the US, Canada, and outside North America. It is published semi-annually, in April and October.
In Nelson's Guide to Investment Managers, over 2,600 investment management firms are profiled in-depth in three volumes. Also available on CD-Rom, Nelson's is arranged alphabetically, with indexes that permit searching by geographical area, asset size, asset class and investment strategy.
The Money Market Directory of Pension Funds and Their Investment Managers is a four-volume work listing 45,000 tax-exempt funds, and 1,800 investment management firms that direct their investment. The entries are arranged by type of fund or service and then by geographical area. Money Market Directories also produces the Directory of Registered Investment Advisors which covers 10,000 investment advisory firms. Both directories are also available in electronic format.
The Carson Group, a New York stock surveillance firm, offers up Who's Who Online. The database of investor profiles, previously available in an annual publication or CD-Rom, takes advantage of internet delivery to supply daily updates. Customized searches let the user identify a specific institution, fund, screen for funds, or managers by criteria such as geographic location, equity assets, turnover or investment style characteristics.
Pensions & Investments, which is bi-weekly, puts out an issue in mid-May called Money Managers Directory/Investment Advisor Profiles, with the top 1,000 managers listed by amount of assets under management. There is also an international version in July, with free access to the lists available on the web, though without full details.
Custom services
The essential task of maintaining contact lists can be the drudgery of IR, often seeming to take up too much of an IRO's time. The question 'Why reinvent the wheel?' comes to mind, but so does the answer: the wheel has to be customized for each particular company in a particular place and time.
The so-called 'power tools' in IR are the services which generate information according to specified criteria. Lexis-Nexis Express, for instance, will do customized searches and print out lists or reports. AIMR offers a mailing list service that can produce mailing labels drawn from its membership directory. A unique selection of analysts for a mail-out can be made according to industry, geographic location, and so on. This kind of service is available from many publishers of directories as an alternative, or an addition to, the purchase of the printed directory. Two magazines for brokers, Registered Representative and Research, offer tailored lists of brokers from their subscription lists. Finally, there are companies like the previously-mentioned Carson Group or Technimetrics and CDA (both now under the Thomson IR umbrella), which specialize in producing targeting lists. With all of these services, the costs have to be measured against the savings in IRO time.
No tool, even a power tool, can run an IR program. As the experts point out, IR is an art form requiring imagination and innovation. It is the way tools are used and the way they are adapted to changing circumstances that determine their effectiveness.