Why Proactive and Tailored Investor Engagement Is More Important Than Ever
The first quarter of 2023 saw interest rate volatility, a decline in earnings estimates for cyclical stocks and an investor focus on sustainable cash flow. Defensive value and profitable growth stocks attracted renewed buy-side attention but at arguably higher price points.
Based on findings from Nasdaq’s 2023 Global IR Issuer Pulse survey, messaging around macroeconomic headwinds emerged among the top five challenges for IROs globally and targeting investors was ranked as the top priority for respondents in EMEA.
So, how can corporates better tell their equity story in turbulent market conditions? What innovative tactics are companies using to engage with new potential investors?
Nasdaq IR Intelligence recently discussed these questions with IROs from leading Nasdaq-listed Finnish companies, Kemira and Outokumpu, as well as with the Director of Responsible Investments and Sustainability at Finnish pension fund Varma.
“When the operating environment is changing, it is even more important to look at your own equity story from an external perspective and identify areas that people don’t fully understand,” said Linda Häkkilä, Head of Investor Relations at stainless steel company, Outokumpu. “If investors or analysts lack understanding, it may lead to a situation where they overestimate or underestimate something—both scenarios are quite bad from a company perspective.”
From a tactical IR communication standpoint, Häkkilä highlighted how she may revert to earlier comments made to investors to confirm if they are still valid. If the past comments are no longer applicable, she seeks to explain what has happened and why.
“I think that during these times, it’s important that an IRO is on top of things, is available for discussions and that he/she helps people to understand key topics. It is important to disclose as much as possible, even if that requires internal selling and to be transparent with the communication,” said Häkkilä.
Proactivity and a renewed focus on in-person investor engagement are top of mind at chemicals company Kemira. Citing past challenges around investor meetings quality, the company’s Head of Investor Relations at Kemira, Mikko Pohjala, discussed his strategy to proactively meet investors in person in order to increase understanding of Kemira’s equity story. “We are very proactive. We restarted doing physical roadshows in May 2022 and a physical (hybrid) capital markets day in London. We have been traveling to meet investors in person to make it easy for them to get to know the [Kemira] story,” said Pohjala.
From an investor targeting perspective, Pohjala highlighted approaches Kemira takes, such as tiering investor targets based on analysis from Nasdaq’s Investor Engagement team and then employing an innovative IR marketing campaign that targets specific investor types. “We came up with a list [of investors], and we were wondering what to do with this list.
In the past, we would just send this list to the broker when we go on roadshow, but then we decided to try something different,” said Pohjala.
“We built an IR marketing campaign with a specific investment theme; we created a pitch around a business topic and why it could be interesting to look at Kemira now. For example, if it was a water-focused investor, we would highlight the different water aspects of our equity story. We sent out a campaign email with a short PowerPoint pitch to the investor targets with the goal of planning a virtual IR roadshow. The outcome has been positive, and we are looking to continue to be proactive,” shared Pohjala.
The current situation in Europe has resulted in changes to the Finnish pension fund Varma’s investment policy, according to the firm’s Director of Responsible Investments and Sustainability, Hanna Kaskela.
“Russia’s invasion of Ukraine and the consequent events in global politics prompted us to take a closer look at sustainability risks and responsibility related to geographical areas and governments. We established, for example, that we may invest in defense industry companies under certain conditions,” Kaskela explained.
Outreach to current or prospective shareholders without third-party support has long been a component of investor relations activities but has become even more prominent due to MiFID II and the COVID-19 pandemic. Coupled with turbulent equity markets and a shifting investment landscape, proactive and tailored investor engagement seems more important in investor relations than ever before.
The Nasdaq Investor Engagement customized framework and consultative approach enable IR programs to rethink and refine investor outreach strategies. Learn how Nasdaq partners with issuers to build investor relationships and access new pools of capital: nasdaq.com/solutions/ir-intelligence/investor-engagement.
Plus, find out how the IR landscape is continuing to evolve. Nasdaq surveyed IR professionals around the globe and uncovered several new themes that emerged in 2023. Discover key findings: 2023 Global IR Issuer Pulse Report.
Patrick Hughes
Nasdaq
Patrick Hughes is a Director at Nasdaq IR Intelligence based in London.
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