The secret to building professional investor loyalty more effectively.

I spoke with a few full time (aka professional) investors this week, and was reminded of a simple truth from long ago: 

Investing is a lonely job.

I’m not talking about investment bankers who hunt in packs, or brokers and advisers parading as actual investors. I am talking about the people who are independent, active investors.

Many people either don’t realise or forget about this fact, largely because the experience goes unseen. We are used to dealing with these people at conferences or in boardrooms. So we think of these people as having their own tribe. But those experiences are the outliers for them. 

Most of their time is stuck behind a desk, staring at a screen.

Alone.

But this group is important, because they are super active on-market.

Two key stats from prior articles are relevant here:

1. The majority of your stock is bought by existing shareholders; and
2. The majority of trading is done by people in the mid register: the top of your register, excluding your top 20.

With this in mind we know this group is very important to a listed company. A large part of those mid register holders (or ex-holders) are going to be either full or part-time professional investors. 

They are going to be lonely, and they share a lot of common traits:

1. They work by themselves.
   Either it is at home, or in a small office, they are a solo-operator. There is no team, no culture, no one to celebrate wins and share losses with.
2. They have a data setup.
   This is a “behind the screen” game. They are based on a computer and operate almost entirely online. Because they both day trade and hold long-term positions, they are set up for both. Their main screen is a trading screen, but they look for newsflow as added data points.
3. They have brokers, but make their own call.
   Whilst they have brokers for access and flow, they make independent decisions. They are looking for advice and access, and will pay for that, but don’t want to give over control of their funds. This is their gig.
4. The vast majority are blokes.
   Why is this the case? I can only guess: maybe guys have more hubris to believe they can outperform the market? Maybe it’s to do with the gender pay/wealth gap. Or maybe it’s because men are twice as likely to invest as women. Whatever the reason, and there are plenty of exceptions, there are way more male professional investors than females.
5. They try to be rational, but fall in love easily.
   Because they are behind a screen, and dealing with numbers, these investors believe they are purely rational. They have good reason to believe this, too, since they take such painstaking efforts to break their decisions down to cold hard numbers.
   But, whether because of human nature or because they are starved of human contact, any actual interaction that this group has with a company counts for a lot. I distinctly remember one investor saying, “I hesitate to talk to a company, because I know if I do I might throw the fundamentals out and invest & hold on a whim.”

In short - they work by themselves, believe they are great stock pickers, and try to stay analytical, but in reality they can fall head over heels for a story and a team - because they lack that in their daily work.

That last bit is probably one of the most important aspects here. If, as the stay-at-home investor, you have no culture, if you have no team, and your only purpose is to make more money - then you fundamentally lack real purpose and a personal drive. 

As a listed company, why is this important to you?

Well - you want more of this type of investor right? Someone with a big balance sheet who can buy on-market and in placements, who can support and advocate, and can fall in love with your company.

So - what can you do to attract more of them?

I would think the place to start is to invite them in: ask them to be part of the journey, the team, and the culture - give them a culture to be a part of.

We know from recent data that two of the top three pages that investors spend time on are the team page and the projects page ( i.e. who is in the business and what do you do).

We also have research to back this up, with one memorable professional investor telling us, “I need to have a good IR experience with a company, so I can feel confident that others will have a good experience too. Otherwise I can’t expect other money to follow me.”

It’s simple: the more you step away from the analytical, quantitative message (bid/offer/chart) and embrace the qualitative message (people/projects/future), the more likely investors are to become part of your story.

Another effective way to engage this group is to introduce real-world events: dinners with high-net-worth investors, drinks with a broader investor base, or adding informal meetups to your roadshows. Bring your team along to these events so that investors feel included.

Offer them a relationship, not just a trade, and see what happens.