Many stocks have investor relations personnel. How can you judge their success or failure?

Many listed companies will have people dedicated to investor relations – either in-house staff or outside personnel from dedicated firms. Just what do they do for your company and how can you judge their success or failure?

 

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What your company’s investor relations people do?

The primary responsibility of a company’s Investor Relations personnel is to communicate the financial performance, business strategy, and long-term goals of their organisation to investors. They work closely with senior leadership to accurately explain the company’s current state and future plans.

Investor Relations personnel serve as the bridge between the company and its shareholders. They create and maintain relationships with current and potential investors providing them with detailed information regarding financial results, risk management strategies, and operational performance.

This can be done through conference calls, one-on-one meetings, site visits or even expensive steak lunches with groups of investors at major CBD restaurants.

 

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— QMines Limited (ASX:QML) (@QminesL) June 23, 2023

 

Additionally, they create company presentations, develop investor messaging through press releases or other materials, respond to inquiries from the investment community (both media and institutions alike), monitor market trends affecting their industry sector or company-specific investments, and coordinate customer visits.

Some investor relations professionals have experience as financial analysts and may provide certain advice to the company to the extent it impacts investor relations. In today’s data-driven market environment that is constantly in flux, Investor Relations personnel are essential in helping companies stay ahead of the competition (their listed peers).

By keeping investors informed on key developments within their organisation they can help build trust and credibility with investors.

 

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How to judge their success or failure?

Well, whatever else is said to the contrary, primarily it is how the share price performs. If the share price goes upward, then they will be deemed to have done their job well. But if the share price lags, then that won’t be the case.

Companies may be good companies but still suffer a lagging share price just because of poor investor relations. Investors may not know about the company or just cannot understand its business model – good investor relations practitioners ensure this is not the case.

Company CEOs will also want pieces of media coverage if that is also their responsibility, although it is very hard to get coverage unless the company has major news. They may also judge engagements with the company on its social media pages as well as by increases (if any) in volume of share traded on the stock exchange.

 

The bottom line

Of course, the investor relations function can only do so much if the company is a bad company anyway. If they’re constantly downgrading and/or missing guidance or commercialisation timelines that have been set, if they are constantly churning through CEOs and directors…not even a Rockpool lunch will get investors to put their money into such a company!

And at the end of day investors need to do their homework on companies before investing in them. Because no company will tell you they don’t have any plans for the future.

 

 

So while it is worth knowing while investor relations personnel exist, anything they do cannot be a substitute for companies achieving positive feats. The role they play is ensuring the company does not suffer just because they don’t know it even exists.

 

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