4.2 Investor Targeting

For obvious reasons, the greatest importance is attributed to the «right investor base».

Companies estimate that their share would increase by 15 percent and the volatility would fall by 20 percent over the next two to three years if they had the perfect investor base (study by the National Investor Relations Institute and the Rock Center for Corporate Governanceⁱ), Consequently, increased engagement with existing investors and the geographic diversification of the investor base are the two most important objectives of the companies listed in Western Europe (IR survey conducted by BNY Mellonⁱⁱ).

A core activity for Investor Relations consists of finding out from the wide variety of potential investors which ones are a good fit for the company in question. Companies can rely on the services offered by banks and specialized consultants for this or they can take matters into their own hands. The following criteria are helpful for this. What is required for investor targeting is access to databases (see ➔ Chapter 4.3) that allow investors to be selected using a variety of criteria, display current portfolio structures, and provide other market data.

Prioritizing the criteria can be effective when selecting investors with the support of databases. The criteria «investment style» and «sectoral focus» are generally at the top of the list here. For example, investors who hold shares in competitors but who have not invested in your company can be identified using peer group comparisons.

A portfolio analysis applying other criteria will reveal which aspects play a role in the decisions taken by an investor. Aspects of your company’s own «equity story» can be accentuated on the basis of this fundamental analysis. Is your annual growth rate higher than that of the competition, for example? Then it will be worth asking the manager of a «growth» fund the question of why they have actually invested in the competition rather than in your company. Finally, it should be remembered that, along with the growth of passive vehicles, more and more investment decisions in the stock market are not made by people but by artificial intelligence.