Speeding tickets, missed signals, and your marginal buyers.
Retail investors are filling the gap as institutions pull back. They’re active, on-market, and shaping price momentum.
There have been two, super relevant articles by Chanticleer in the AFR this week about investor relations and the changes happening in the market.
Firstly on Wednesday they published an article about the dozen ASX200 stocks that have been hit with a speeding ticket on big swings in share prices, especially when the results were in-line with market expectations.
Then there was a follow up on Thursday night about the emergence of retail investors as “friendly, high conviction buyers.”
Regardless of the size of your company, individual investors are super relevant, and these articles share a lot of common sense, and some great insights we share.
“The biggest thing companies can do is keep the lawyers and investment bankers out of their investor relations function."
Reading through the ASX200 companies’ speeding tickets, it’s clear some companies are taking legalistic approaches to investor relations and communication, rather than common sense.
"Companies need to realise that even their most sophisticated investors are pretty ordinary and plain-speaking people with basic expectations about disclosure.”
Obviously companies need to stay cognisant that they are in a regulated channel, but keeping it real is extremely important.
"Retail investors may not get one-on-one meetings or sway AGM votes on their own, but they’ve emerged as a friendly high-conviction buyer at a time when some companies have been particularly friendless.”
And this is especially true of the small and mid caps, where active institutional investors have backed away from in recent years.
Whilst we definitely see them coming back (Regal is now underweight ASX 200 and overweight small caps), they will like to come in off-market - buying into placements and lines of stock.
This won’t move the share price, so directing your investor relations activities to active, on-market buyers, will give you more impact.
“What are companies doing to re-engage the retail base? There’s an army of buyers out there for the right story, even if this is the advice from institution-facing investment banks and even if they don’t have the order size to stop a day one trading avalanche.”
What to do? I think I know the answer…
Cheers,
Ben