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ICR Compares Retail vs Institutional Comms Strategies
Retail investors hold strong despite S&P decline
Welcome to another edition of The Roundtable Roundup -
This week the investor relations industry descends upon Orlando, Florida for the 25th anniversary of the ICR conference. ICR is a leading strategic communications and advisory firm and their annual conference hosts over 2500 attendees and 150 public company CEOs and CFOs and provides a forum to reach institutional investors and interact IR specific vendors. This year’s event will be held in the shadow of a tough earnings season with many companies looking at back-to-back quarters with losses and leaning on strong corporate communications to maintain their stock prices. As of Monday, dozens of press releases have been published by participating companies and we’ll be looking closely at how stakeholder innovation is playing a role in IR communications during this time.
ICR publishes survey highlighting need for unique institutional and retail investor comms strategies (ICR)
Before this year’s event, ICR published a survey focused on the importance of clear corporate communication and differences in priorities for retail and institutional investors.
“Legally, companies are only required to disclose their balance sheet and cash flow statement in SEC Filings,” says Tom Ryan, cofounder and CEO of ICR. “However, the reason companies don’t leave it at that is they want to create context around the numbers. They want to tell a compelling story about how they achieved those results and what they believe is in store for their future.”
ICR asked institutional and retail investors to rank which sources of information were most impactful in their decision-making process and there was no overlap among their top four answers:
Institutional / Professional Investor priorities:
Direct interaction with management teams
Investment bank research analyst reports
Retail / Less experienced investor priorities:
Financial media interviews / stories
Information on a company’s website
Investor blogs and websites
Social Media sources
Ryan goes on to add, “Ten years ago, I probably would have said, ‘Investors don’t want information through social media. However, when a company posts about their quarterly earnings on LinkedIn or Twitter, it amplifies the message. Social media has become no different than a corporation getting their news out in the Journal.’”
As IR communications firms stress the differences between managing institutional and retail investors, it begs the follow-up question from management teams, “how can we follow your guidance for uniquely communicating with retail investors if we have no way of identifying who they are and what they care about?” Stakeholder Labs is here to capture that information and provide IR leaders with critical software for executing their retail investor communications strategies.
Sam Altman, CEO of OpenAI and former President of Y Combinator, pens essays suggesting every American adult should get one share in the American GDP every year (HackerNoon)
Just last month, on the heels of releasing OpenAI’s ChatGPT, Sam Altman published an essay hypothesizing about the mechanics and impact of issuing every American adult stock in the US economy.
The timing of Altman’s essay coincides with experts predicting major disruptions to the the global service industries as AI steps in to automate many Americans out of their jobs.
Altman writes, “I believe that owning something like a share in America would align all of us in making the country as successful as possible — the better the country does, the better everyone does — and give more people a fair shot at achieving the life they want. And we all work together to create the system that generates so much prosperity.”
Altman continues, “The joint-stock company was one of the most important inventions in human history. It allowed us to align a lot of people in pursuit of a common goal and accomplish things no individual could. Obviously, the US is not a company, but I think a similar model can work for the US as well as it does for companies.”
The strategy of taking our established corporate governance system and using technology to provide more access to long-term equity as a solution for wealth disparity is an idea that is deeply rooted in Stakeholder Labs’ mission. As OpenAI closes in another $300M in private financing at a $29B valuation, we would also encourage them to create equity opportunities for retail investors and other key stakeholder in this civilization-altering technology in the same spirit Altman is advocating for more equitable access to the US GDP.
Individual Investors Hang On in Wild Year for Stocks While Pros Sell (Wall Street Journal)
During the wildest year for global markets since 2008, individual investors have been doubling down on stocks. Many professionals, on the other hand, appear to have bailed out.
U.S. equity mutual and exchange-traded funds, which are popular among individual investors, have attracted more than $100 billion in net inflows this year, one of the highest amounts on record in EPFR data going back to 2000.
Ben Snider, a managing director at Goldman Sachs, said institutional and individual investors often dump stocks in tandem when the economy is slowing and indexes are tumbling. That doesn’t appear to have happened this year, despite the S&P 500’s decline.
The Wall Street Journal published another article titled, Rookie Traders Are Calling It Quits, and Their Families are Thrilled, which also suggested that new retail investors we electing now hold their positions as opposed to participating in the latest fad or meme stock.
Despite 2022’s volatility and S&P 500 decline, the net positive of increased retail investor participation and long-term holding is a positive for stakeholder innovation and our overall markets.