Investor Relations

SEVEN KEYS TO SUCCESSFUL INVESTOR RELATIONS 37on market trends, institutional investor behavior, intelligence on marketrumours. Institutional investors. This category corresponds to an insurancecompany, a pension fund, or a mutual fund, as well as to a speculativeor hedge fund. Institutional investors manage their own proprietary fundsor those of third parties. Funds that are managed by government investmentvehicles are called sovereign funds and tend to grow in importance and visibility.Whether they own shares in the company or not, and regardless ofwhere they are geographically located, institutional investors are the largestplayers in financial markets. As such, they can move share prices up ordown, buy or sell substantial stakes in companies, and request to be presenton boards of directors. The press. IR departments usually do not handle media relations.Many believe that it is because they require different technical and relationalskill sets than Investor Relations. Typically, press and media relationsare entrusted to the corporate communications department. Media relationscover a wide range of target audiences, which receive, sometimes indirectly,the company’s financial communications: the business and financial press,including newspapers and magazines for retail investors, and journalistsin the generalist, trade, and foreign press. Technology has dramaticallyexpended these target audiences from print to online media. Note that newsagencies are nonetheless key targets for Investor Relations: Press releasesbecome real-time news for the entire investment community, once they hitthe wire services. In addition, journalists often maintain close relationshipswith financial analysts. They are a good information channel for small- andmedium-sized companies that are not widely covered by analysts. For thatmatter, it makes sense to invest time and resources in clear and comprehensivemedia relations. In addition, certain financial media play an importantadvisory role for retail shareholders. Therefore, maintaining a good relationshipwith journalists is important for Investor Relations too, as journalistshave a powerful influence in building or destroying corporate reputations. Industry analysts, trade press. Industry analysts are researchingtechnology and market trends. They increasingly are a source of informationfor financial analysts and investors. Catering to them in a professionalmanner is another area where an integrated approach to communications iscritical. Bondholders (see debt Investor Relations sections 1.5, 2.3.4.2, and3.6.3.2). They have traditionally been served by treasury rather than by IRdepartments, but bonds are no longer seen as simply safe assets: Investors nowlook to them to provide their portfolios with extra performance. Companiesthat issue debt securities must, therefore, get organized to meet with thedemands from debt investors: specific presentations that include ratios otherthan those used by equity analysts, dedicated meetings, or at the very least,