On September 6th, Q4 hosted a panel discussion on capital markets intelligence. Adam Frederick, SVP, Intelligence at Q4 hosted a jam-packed conversation between Karen M. King, VP, Investor Relations & Corporate Communication, LivaNova; Matt Danziger, VP of Investor Relations, Pure Storage; and Mike Coffey, VP Business Development, Intelligence, Q4. The conversation explored industry best practices and offered valuable takeaways on the rise of quantitative analytics and how new technologies are empowering IROs with real-time insights and actionable intelligence surrounding trading, valuation and market expectations.
#1: Traditional “stock surveillance” vs. technology driven solutions
Stock surveillance used to rely solely on human analysis of trade settlement data. Considering efforts were manpower-driven, there were always limitations on data mining. “It was a much simpler time,” said Mike Coffey. “We only had to deal with two major exchanges, NYSE or Nasdaq. There weren’t any dark pools or off market transactions.” Fast forward to today, where we have 16 stock exchanges and Nasdaq and NYSE trade just a fraction of the volume. The market has more data points than ever before. The good news is that surveillance providers are able to cypher sentiment and volatility expectations in real time and IROs are able to better understand the market structure, what’s driving performance, forward-looking market expectations, and proactive activism monitoring.
#2: Modern market intelligence: An IRO’s perspective
As with any new technology or solution, users of today’s surveillance may not fully grasp the value of the data they have access to, and how to turn that information into actionable insights. With this in mind, the panel explored how essential surveillance is to an IR strategy. “Whether it’s targeting new investors, managing expectations, or communicating a new strategy, surveillance helps you achieve the goals you’re trying to achieve and measure that impact over time,” agreed the panelists. At any given day, surveillance makes it possible to answer: what’s happening in the market today?
Gaining access to critical data that helps tell a more complete story, enables IR professionals to be proactive in how they communicate to not only shareholders but to their c-suite and the board. For example, Karen uses surveillance pre earnings or upcoming investor days to track the behavior of investors and get the pulse of the market. “Are investors anticipating that something big is going to happen or will it be a normal quarter? The insights I garner from surveillance allow me to be proactive and share information with my management well in advance of the event — preparing us for what’s to come,” commented Karen.
#3: Quantitative analysis provides actionable intel for IROs
Good investor relations is about communicating effectively, shaping perceptions and attracting the right investors, at the right time. Having access to accurate and timely intelligence is critical in effectively making decisions and managing stakeholder engagement. Our panelists shared how they integrate surveillance into their day-to-day to measure peer performance, understand market trends, or monitor shareholder activity. For example, Matt uses the tool to better understand the makeup of his cap table and his top 20 shareholders. He also looks to how many growth funds are invested in his company; how many of them have been around for three years; who the longer-term value oriented shareholders coming up in the cap table are; and who he should be going after and proactively putting management in front of. In Matt’s opinion: knowing what’s going to happen in the next 3- 5 years is going to define what type of shareholder will own the company.
#4 Integrating stock surveillance into your day-to-day
Back in the day, it was relatively easy to get real-time, valuable color on trading, simply by calling the floor specialist. As we all know, however, those days are long gone. And today, we find ourselves in a new world where technology and cutting-edge analytics are filling the void left by the disappearance of the floor specialist.
With today’s technology, IROs can now determine what is impacting stock price (is it stock specific, peer related, passive investing impact, etc.). “We can easily break down this data on a daily basis. Actually on a 15 minute basis,” shared Mike. Having key insight in real time is extremely valuable for an IRO. “Going on the road, telling your message and being able to see if your message is resonating is key.”
As the market becomes more complex, IROs face a growing need to decipher the noise and understand how their stock is truly performing and why. You can watch the webinar here for more on how to incorporate market intelligence into your day to day to be more proactive and strategic.
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