Building Shareholder Confidence

As reported by CFO Magazine on May 8th, a recent poll of CFOs re-enforced what most consider the core challenge for small-cap (under $500 million) companies: lack of analysts. 74% of the companies polled report they have none to two analysts. For the companies that DO have coverage:

“…28% say analysts don’t understand their industry, while 37% say analysts don’t understand their company’s specific strategy. Sixty percent of respondents say analysts’ misconceptions affect their companies’ valuations. Respondents cite a lack of comprehension of their companies’ business models, market dynamics, competitive set, and future growth prospects.”

There’s no question that the overall market structure in regard to the sheer number of analysts (people) is uncontrollable. What a small-cap company can control is their communications.

“The best way to get the market’s attention as a small public company, says [David Johnson, CFO of Johnson Outdoors], is by posting strong results. “When we grow and increase our profits on a consistent basis, we get noticed.” Still, he adds, “We’ve found investors have a very short attention span, so we have to act fast to get the story out.”

But who(m) should a small-cap company target their story to? Wall Street? Main Street? Media? The answer is “D – all of the above.”

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The mosaic of shareholder communications is especially critical for small-cap companies: they need the liquidity boost of from day-traders, they need the buy-n-hold love of “mom-n-pop,” they need a consistent presence in front of their sector Sell and Buy-side analysts, they need media attention and they need to create content. You know, investor relations.

In the one-minute video above, VP John Viglotti explains the parts and pieces of our Capital Markets Visibility 365 program, a 12-month communication strategy which was expressly created for small-cap companies. There is a series of step-by-step videos here.

I think it is fair to say that for small-cap companies, investor relations is a long-tail marketing process. That’s a good thing, as long as transparency reigns. FYI: a full year of Capital Markets Visibility 365 costs less than one week most pump-n-dump “promotions” charge.

Have a great day.