Creating a Strategic Investor Relations Program
Situation:
As part of a broad turnaround effort, Ceres leadership developed a strategic investor relations program for a Fortune-500 retail company. After several years of negative and unpredictable business results, this one-time Wall Street darling was trading at an all-time low. Only a single sell-side analyst continued to follow the stock, and high-turn traders were creating significant volatility in the share price. Initial perception research showed that management lacked credibility and investors were not confident in the new team’s turn-around plan.
Approach:
- Created a program to attract and obtain the mix of shareholders that could drive the highest sustainable valuation by:
- Positioning the company as a long-term growth and return story.
- Broadening and diversifying institutional ownership.
- Focused performance objectives by analyzing financial metrics that drove best-of-breed valuations and the levers the company could pull to impact those metrics
- Using quantitative and qualitative analysis to determine the desired shareholder mix and identify potential shareholders who fit the company’s profile and were most likely to be interested in the story
- Created a plan to heighten management visibility and credibility via direct, personal outreach to targeted shareholders.
- Developed communication tools such as presentations, message platforms and an investor Web site.
- Provided senior management with presentation training and coaching on how to handle difficult questions and education on the workings of Wall Street.
- Developed disciplined processes and systems to track activities, and to measure and report results and market activities.
Results:
- Shareholders fitting the volatility profile decreased 18 percent, while long-term holders were up 25 percent in just the first year of the program.
- Annual investor perception studies showed marked improvement in just the first year of the program.
- The company’s most preferred target became its largest shareholder, a position they held for more than three years.
- Achieved a 500 percent increase in sell-side analyst coverage and a 1,000 percent increase in the value of its stock by the fourth year of the program.
- The company more than doubled its market capitalization.