Boom in IR demand for targeting tools

The demand for targeting tools has risen substantially in the past two years, particularly at mega-cap companies where almost six in 10 IROs say they’ve increased their use since 2018.

Overall, 43 percent of the 249 IROs surveyed in IR Magazine’s Technology & IR 2020 report cite increased use of targeting tools. They use them to help prepare for roadshows and engage more in direct targeting. Some see the technology as complementing and, at times, even replacing the traditional service they receive from brokers.

Camilla Bartosiewicz, vice president of investor relations at Toronto’s Altus Group, tells IR Magazine she relies on ‘mission critical’ targeting tools including FactSet financial data and IHS Markit’s platform for checking investor profiles, surveillance and ownership analysis. She leverages Webex for IR meetings during the lockdown.

‘Historically, if you did a conference call it was always a call, but now you jump on video,’ Bartosiewicz says. ‘It makes it easier for investors to come to us directly. A, because you already have the relationship and B, instead of going to brokers and saying, Can we meet with so-and-so? and then going back and forth on different dates, the investors just come to us.’

Altus, with a market capitalization of about $2 bn, still sees a role for the sell side, however. ‘[Sell-siders] are the ambassadors of the stock,’ says Bartosiewicz. ‘I think they give me better, deeper insights and can help facilitate introductions to some great prospects.’

Broker relationships

David Purcell, head of IR at Assura, a £2 bn ($3 bn) market cap property business based in Warrington, northern England, relies on BRR Media for webinars and to offer investors virtual property tours. Purcell also posts videos of CEO trading updates or other announcements through LinkedIn and uses an ingage customer relationship management tool so Assura can contact investors directly by mailshot and organize schedules via an app.

‘We’re still very heavily relying on our brokers,’ says Purcell. ‘Some of that is because we’re a bit out of the loop being based in Warrington as opposed to London. But we’re trying to do more and more in-house… it does make the initial contact with investors a little bit easier in that they aren’t worried about having a relationship with a broker.’

At the other end of the financial spectrum is General Electric, the Boston-based multinational with a market cap of around $92 bn. GE uses customized communications and a third-party service provider to help prioritize meetings based on historical interactions, current holdings, buying power, propensity to the stock and the alignment of investors with factors GE cares about, says Steve Winoker, GE’s vice president of investor communications.

Winoker, speaking at an IR Magazine webinar in mid-November, said Covid and Mifid II ‘definitely had a significant impact on many folks within the buy side and how they are reaching out directly. And some of them are even developing their own conferences.’

Tech solutions

The advances in technology and the increasing reliance of IROs on tech solutions shouldn’t be seen as a disintermediation or replacement tool for brokers, however.

‘These things can work hand in hand,’ says Michael Hufton, managing director at corporate access firm ingage. ‘Our targeting tool uses data. [Brokers] might be using things like conversations their sales people will be having. And it is the interaction of those two things that gives a much better picture and map for companies because you’re getting additional input using different data sources.

‘In my view, what you are never doing with a targeting tool is saying, This person is the perfect candidate to buy your stock. Because you cannot ever know that. What you might be able to do is sift through the 28,000 investment institutions in the world and say, Well look, in this particular location these 20 may be interesting and are worth a go. So you are parsing it, narrowing the selection rather than generating the perfect target.’

While nearly seven in 10 IROs surveyed by IR Magazine about targeting tools say they are satisfied with the products on the market, not everyone sees tech as a panacea: 25 percent are neutral and 6 percent are unsatisfied.

Among the complaints, IROs say some targeting tools are too complicated and inflexible and many have concerns about their accuracy, in terms of both how up to date the information is and how users can be sure they are hitting the right targets.