Investor targeting strategies are changing — and changing fast. The impact of new regulations, new technologies, and new shareholder demands are creating a dramatic shift in the way the buy side and sell side interact.

IROs can no longer rely on sell side or corporate access. As a result, more companies are taking matters into their own hands when targeting new institutional holders. Smaller shops are reducing or eliminating sell-side coverage, and some are going to the pay-for-coverage research model. Corporate access teams are increasingly taxed as they aren’t a profit center for the firm, and issuers are seeing schedules with lots of holes or a large hedge fund presence.

So what makes for good targeting in this dynamic landscape? I recently had the opportunity to participate on a panel of cross-market leaders to examine innovative and evolving approaches to boost targeting effectiveness. Moderated by Bill Choi, VP of Investor Relations at Zscaler, the panel featured my industry colleagues Tully Murphy, SVP – Institutional Equity Sales at Jefferies, and Brendan Fitzpatrick, Director – Analytical Services at IHS Markit.

Here’s a look at some of the key insights that emerged:

Larger buy-side firms are building their own corporate access teams — Capital International, T-Rowe, and Fidelity to name a few. Issuers are sent to a coordinator who is charged with gauging interest from disparate parts of the firm, and meetings are scheduled that way. Issuers should begin to build relationships with buy-side corporate access coordinators.

Jefferies has invested in the corporate access function and works in partnership with corporate investor relations teams to increase the value of NDR’s. The interaction between the two can make for an outstanding road show — the firm’s corporate access teams know their regions very well (including the comings and goings of analysts), the PMs help sharpen the list, and the corporate IRO knows the history of past interactions with non-holding institutions.

All panelists agreed that if issuers are going to try to schedule meetings themselves, using an outside research company for pre-qualifications will make the process more efficient.

  • Call first and gauge interest. Make sure all disparate fund managers or analysts at the firm have been contacted.
  • IROs need to make sure they have a “Company 101” easily accessible on their website. In the old playbook, it was the laminated fact sheet. Today it’s video and quick reads that are formatted for phones, laptops, and tablets.

When targeting on your own or working with your market intelligence provider, it’s critical to use the investment peer process, not the industry peer process.

  • A study by IHS Markit shows there is very little correlation among active holders across direct competitors and peers. Accordingly, meeting with your biggest competitor investors may just be educating them for their current position, not convincing them to take on the transaction costs of selling their current position and investing in the company.
  • Instead, IHS Markit recommends identifying companies with similar investment characteristics and risk levels — “best fit” investors who will be a more likely buying audience.

Focus on the fund-level dynamics, not the larger firm investment styles in trying to find right fit investors.

  • Fund families are huge. And there is no single investment style. This is making traditional targeting and shareholder basis a lot tougher. There was a lot of frustration among our audience members that it’s becoming more difficult to assign investment styles to specific firms.
  • Much improved and timely fund-level information in the U.S. is making it easier to target using fund-level styles.

These trends will only heighten throughout the year. Amid the uncertainty, one thing is clear: IROs will need to optimize their activities with innovative tools and techniques. Keep these new realities in mind as you plan your targeting strategies. Having a flexible and informed approach will help you attract new shareholders aligned with your company’s strategic outlook.