- By Dan Romito, AVP, Business Development & Strategy, Nasdaq IR Intelligence
Over the last ten days, the Nasdaq Corporate Services Advisory team has observed in the marketplace certain outlooks, responses and tactical adjustments by market participants to the coronavirus. Based on our team’s observations and internal data analytics, there some shared common denominators across certain sectors, market caps, and, for that matter, regions. More importantly, the aim of our consulting services is to provide assistance for the challenges our clients must currently endure.
Accordingly, we are providing the top five challenges we are currently observing in the marketplace along with how each one of our solutions may help to address and potentially resolve these challenges.
1. Tactically adjusting a strategic plan under the assumption that investor conferences may be severely affected for the remainder of the year
- Social distancing, as recommended by several different governing bodies, may present an obstacle in the ability to maintain investor meetings.
- Travel restrictions, especially by air, may add to the complexity of a sell-directed NDR.
- Ongoing relationships and conversations with investors are increasingly becoming more reliant on virtual meetings.
- Virtual meetings can be difficult to organize and manage.
- ConnectIR, when combined with the people-level detail offered by Strategic Capital Intelligence, provides an easy and efficient tool for reaching out to the individual identified as an opportunity in an organized and tactical manner.
- ConnectIR is designed to supplement traditional corporate access activities and is a module within Nasdaq IR Insight that provides users with a unified workflow solution that streamlines engagement and scheduling for investor access-related events.
- When combined with Strategic Capital Intelligence, clients are partnered with an analyst who can help pinpoint the ideal person who displays a distinct behavioral appeal for a specific investment thesis conveying by the company.
2. The sell-side is utilized for research, but understand the limitations they are currently enduring may last into the end of the year
- Based on our meetings analytics data, the sell-side remains sector-focused, implying there may be a land-grab for the same audience.
- Our meetings analytics data also indicates that prior to coronavirus, the selection of coverage may be fairly close to a zero-sum game.
- In other words, it may be systematically prohibitive for a variety of analysts to simply add more coverage to their universe.
- Sell-side coverage is beneficial, but there is a growing contingent of long-only equity managers that do not utilize their services.
- The ongoing consolidation of institutions across the globe makes it increasingly difficult to pinpoint the correct person most interested in any particular investment thesis.
- Attaining additional sell-side coverage and broadening the general understanding of the stock for a non-coverage universe can be a simultaneous undertaking and may not be mutually exclusive.
- The analytics provided by Nasdaq’s Perception business may help our clients to understand potential qualitative misunderstandings and competitive differentiators within their stock.
- When combined with Strategic Capital Intelligence, our team supports clients’ efforts to identify people, particularly generalists, who display a tendency and appeal for an investment thesis and/or comfort with an evident vulnerability.
3. It may be helpful to proceed with proactive messaging under the context that this is a critical time to control the narrative
- One of the most difficult undertakings is not necessarily pinpointing the buying and selling, but understanding the buying and selling from a relative perspective.
- In other words, since everyone seems to be selling, market participants may want to know if they are being oversold relative to their appropriate peers, sector and applicable benchmark.
- Without the relative perspective, it may be both difficult and daunting to prioritize among a dynamic where a herding mentality during unprecedented times of volatility.
- Controlling the narrative is reliant on understanding the current competitive positioning of the stock, especially within a relative context.
- The ability to aggregate surveillance positions across a broader audience is one way we can support our clients.
- Surveillance services helps our clients to better understand the buying and selling taking place for their respective stock within a relative context.
- This allows a corporate to prioritize shareholder conversation and tactically adjust messaging depending on the competitive dynamic.
- More importantly, when corporates need to understand what is going on with the stock, we have the ability to explain activity in real-time within a context that captures a substantial portion of overall market activity.
4. Waiting for 13Fs may not be as helpful when managing the ramifications of the current market sell-off
- Considering the current state of the market, companies may not be able to afford to wait until the middle of May for the next round of filings.
- Without understanding the flow of capital within a given space, it may be difficult to prioritize outreach and make well-informed decisions.
- Our platform capitalizes on our scale by aggregating out position change in a segmented and granular fashion.
- In other words, our size provides us with the ability to capture a substantial portion of market activity that we can separate into market cap, sector/industry and/or region.
- More importantly, this capability can be achieved in real-time.
5. Over the next 12-24 months, there may be a window of opportunity for active portfolio managers to earn noticeable alpha
- Based on our team’s research, when indexes rebalance next, our team expects the market to be flooded with excess supply that may remain intrinsically cheap for a given period.
- Given that the coronavirus is less of a structural risk than the Financial Crisis, corresponding rebound may not take as long as the recovery we observed between 2008 and 2012.
- This combined dynamic may provide active managers with the opportunity to seek meaningful and distinctive alpha.
- Investors are beginning to increase their respective expectations when expressing their view on the standards dictating transparency and disclosure.
- Our research indicates that ESG-related data points and frameworks, when utilized efficiently, may provide insightful competitive differentiators for active portfolio managers who are attempting differentiate many pool of options.
- Because it remains unstandardized, and because the world may likely operate with an added element of risk aversion moving forward, greater transparency for non-fundamental data may increasingly become the norm.
- Our services are designed to help our clients sift through what data is simply designated as “noise to the investment community” understand which non-fundamental data may be material to their investment decision-making process.
- Once material ESG-related data is identified, ESG Advisory is a solution intended to assist our clients’ prioritization of each data point and identifying who on the investor side may be receptive to certain messaging.
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