Tom Copeland offers tips on how to encourage analysts’ attention
Q: How do I get analysts to cover my small-cap firm?
A: The good news for smaller issuers is that, while they may struggle to attract attention from the major global investment banks, there are twice as many smaller, independent investment advisers and equity research firms following fast-moving stocks, issuing their research and advice to paying subscribers.
These analysts and research firms have a hungry database of investors to feed new ideas to, providing an opportunity for a burgeoning small cap to catch their eye. Here are three things you can start doing today that could lead to bigger and better coverage.
Get your fiscal house in order. Your company’s financial reporting should be timely and predictable, and the numbers need to make sense. Analysts and researchers want to be able to dig deep into your filings and see supplemental notes on each metric you present, line by line.
The most important thing a company can do in its reporting is provide some insight into the future on all aspects of the business. Yes, companies are averse to forward-looking statements for many good reasons, but it helps make the job of the analyst easier and gives existing and potential shareholders confidence.
Craft your company’s story. If your company isn’t filling a unique market demand, you’ve got bigger issues than not being covered by analysts. Your firm is in business because it offers a superior product or service for a defined customer and unmet need.
Craft its story by constructing three major talking points on the product or service, the financial performance and the market opportunity, then polish a message that will appeal to analysts.
Reiterate these points in filings, on your website, in press releases, on shareholder calls and throughout roadshows, and any other time you have a public soapbox to stand on in front of the retail and online investment community.
Increase awareness and transparency. Continue doing your job, and do more. That may mean continual roadshows, keeping the websites updated, releasing regular press updates on progress, and holding shareholder calls following earnings releases.
Increasing awareness also means stirring up conversations among retail investors in the blogosphere and with industry and financial journalists, broadcasters, reporters, writers and luminaries.
Soliciting media placement for your CEO, by sending press kits asking for interviews to local and national press outlets, for example, is an easy way to begin creating some buzz around your firm.
Equity analysts use sophisticated screening models to whittle down thousands of issuers until they find a stock they think is worth talking about. Following these steps will help make your stock one of them.
Tom Copeland is senior equity analyst and partner at Bullworthy.
