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Communicating With Investors And Understanding Their Behavior During A Major Crisis

POST WRITTEN BY
Christopher Miglino

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In the face of the pandemic, personal health is obviously the biggest priority to every citizen of the world, but the plummeting of the global economy isn’t far behind. The threat of another financial recession looms, and in the meantime, institutional investors are repositioning their portfolios. Many retail investors are seeing their investments dwindle away in real time. In these uncertain times, it’s important to understand how your investors are reacting to their positions in your company and how to utilize the latest technologies to communicate with them.

Step 1: Understand Who Is Sticking With You

When you are running a public company, one of the hardest things to understand is who is sticking with you and who is selling your stock. While the SEC provides requirements for reporting from funds, these reports are like looking in the rearview mirror — they don’t add much value by the time you get the data.

While many issuers don’t put a lot of value in retail investors, many of the smaller-cap companies are dominated by high net worth individuals with significant positions in the company, but who don’t meet the threshold to have to file with the SEC. Especially in volatile times, issuers need to understand what both institutional and retail investors are doing in real time. Waiting is just not an option. Once you identify the sellers of your stock, you need to ask two important questions: How much stock do they have left? Will they be unloading the rest of what they have? Knowing this reality will allow C-suite executives to understand true sellers instead of the invisible short-seller boogeyman.

Step 2: Comfort Them With A Communication Strategy

Once these sellers are identified, your best course of action is to implement a communication strategy for these sellers as well as for all of your shareholders. Reassure your investors by establishing a communication protocol. Let them know you’ll be sending out a weekly or biweekly update in which you conduct a comprehensive analysis of your company’s position and business strategy moving forward.

You may want to activate a platform that enables investor relations teams to easily track buying and selling trends and spit them out in the form of intuitive reports. Alongside this reporting, you’ll want to provide your shareholders with as much relevant information as you can about how the current situation will alter the way you are doing business and the opportunities and risks associated with the strategy that is being put in place.

Step 3: Engage Investors On Social Media

During times like this, investors will turn to social media for their news and updates. With targeted social media campaigns, you can reach former and current investors across devices whenever they go online. Current targeting capabilities allow for companies to make sure that investors are seeing your data even if they miss a press release or filing that the company has put out.

All in all, during a major crisis, it’s extremely important to be open, honest and direct with your shareholders. They deserve it. Put yourself in their shoes, and that realization should click pretty quickly. Stay smart and calm, and the rest will follow.

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