Thursday, October 3, 2013

Is the Investor Relations Industry in Trouble? Not Necessarily

Awhile back I invested in a small-cap Chinese company.

To compensate for the company’s limited investor relations efforts I initiated some of my own.

Since July I’ve written numerous posts on my personal blog and used Twitter and StockTwits to drive traffic to them.

While it would be presumptuous to assume that my blog posts impacted the stock, the following has occurred since I was the first to write about them:
  • Stock price is up (link
  • Daily volume is up (link
  • Other blog posts have been written about the company (link
  • Discussion of the company on different online investor forums has picked up (link
  • Investors following the stock have increased dramatically (link
My takeaway? Traditional IR strategies are no longer the only option for public companies looking for attention. The Internet offers endless, scalable opportunities for companies and their shareholders to spread their messages and court new investors.

The second takeaway? Public companies don’t need big-name online platforms to spread their messages – even if some, like StockTwits in this case, can clearly be helpful. All I did was write a post on my personal blog.

So if a personal blog post can help drive increased interest in a company what does that mean for the value IR firms claim to provide?

The Importance of IR Firms

In my opinion, IR firms are important – BUT with one caveat.

They must re-invent themselves in order to retain their value in this noisy, digital age.

Implementing the same basic IR strategies is no longer enough. But leveraging the increasing number of opportunities to reach investors online can make IR firms more valuable to their clients and better justify their fees.

How Can IR Firms Re-Invent Themselves?

The biggest opportunity for IR re-invention is leveraging their clients’ IR content.

As I’ve written before, financial content is the most important investor relations asset public companies have in their arsenal but have yet to effectively exploit.

But IR firms can help.

Just like IR firms help companies write press releases and investor presentations they should be increasingly focused on preparing their clients’ financial content in forms more easily consumable and shareable on social media platforms where investors are looking for new ideas.

A couple of quick examples come to mind:

1. Earnings Calls
  • No one listens to them. 
  • No one reads transcripts of them. 
  • BUT everyone wants to know “key takeaways”. 
Solution: IR firms can help their clients with this – similar to what I did here – and easily promote that content to investors on the web.

2. Investor Conference Presentations
  • No one listens to them. 
  • No one reads transcripts of them. 
  • BUT everyone wants to know “key takeaways”. 
Solution: IR firms can help.

And the list goes on….(roadshow PPT presentations etc)

All of these are examples of valuable financial content IR firms can be re-packaging, re-formatting, and promoting online to better spread their clients’ messages and court new investors.


The investor relations industry is at a crossroads. They have all the tools they need to re-invent themselves to become more valuable to their clients. But until now they’ve shown few signs of doing so.

Along with leveraging their clients’ content as discussed above, aggressively embracing certain social media opportunities would be another important step.

As everyone knows, investors are everywhere on social media looking for new stock ideas. And yet many public companies are still not taking advantage of the wealth of measurable opportunities available there. Social media can only help.

By way of example, it’s a complete mystery to me that companies aren’t following FedEx (ticker: FDX) and taking real-time earnings call questions from the StockTwits investor community. This is a very clear solution to a very real problem for public companies with limited earnings call participation. More on this here.


It’s only a matter of time before online IR effectively supplants traditional IR.

But IR firms have the opportunity to re-invent themselves and better adapt to the digital age by helping clients better leverage their valuable, actionable financial content to court investors online.

I have no doubt IR firms can change their future. But if they don't act soon, fund managers like me will take matters into our own hands and save our portfolio companies a nice chunk of cash by doing much of the IR work ourselves.

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