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Re: STONE GATE REPORTI like what I'm reading. Let's see if they walk the talk! http://www.stonegateinc.com/Institutional-Outreach.html Institutional Outreach Our institutional outreach effort is the foundation of our firm and a core aspect of our success. We have leveraged our long history of providing research, trading, investment banking and our proven track record of building institutional ownership into a robust institutional outreach program. Our team’s extensive institutional relationships and experience creates an unparalleled platform for small cap public companies looking to grow their institutional shareholder base and ultimately realize optimal valuation in their stock. Most public companies seeking institutional exposure either rely on an investor relations firm or the “sell side” to coordinate and manage their non-deal road shows (NDR’s). At Stonegate, our approach is vastly different. We have a fully dedicated sales team whose sole responsibility each day is to reach out to institutional investors on behalf of Stonegate clients. Our salespeople our extremely knowledgeable about our clients businesses and are well equipped to reach out to a large number of highly targeted investors in a very short period of time. Traditional investor relations firms will typically assign an “account manager” to cover several client companies. The account manager is responsible for providing those clients a wide range of traditional investor relations services in addition to arranging non-deal road shows. Given the significant amount of time and knowledge required to cover even one company, let alone 4 or 5, often times the account manager does not have the capacity necessary to effectively arrange quality road shows for each of their clients, which leads to taking short cuts and targeting the “favor” meetings. Stonegate’s knowledge of small cap institutions coupled with a dedicated and focused sales team sets our firm apart from traditional investor relations firms or the sell side. To successfully arrange and coordinate a NDR with the highest quality institutions requires tremendous focus beginning with a thoughtful qualified target list in a given market and then hundreds of phone calls and emails. Stonegate’s sales team is comprised of FINRA licensed professionals with financial backgrounds who are focused exclusively on arranging NDR’s with our large universe of institutional investors. We believe Stonegate’s team oriented approach to institutional outreach is a much more effective solution, as opposed to companies relying on the sell-side or using an account manager at a traditional investor relations firm. Stonegate’s entire team, including the principals, research analyst, institutional salespeople and director of IR work with our client companies to achieve one common goal - building and managing institutional ownership. We have a long history of building institutional ownership through capital raises or open market transactions and have a “real feel” for this process. Institutional targeting For each client engagement, Stonegate provides a comprehensive target list of qualified funds that have a history of investing in companies with similar characteristics. We proactively target those specific funds in each market. In addition to subscribing to numerous data services, including CapitalIQ, Ipreo and Placement Tracker, Stonegate has spent over 40 years building and maintaining our institutional database that provides valuable insight about an institution’s investment preferences. It is also important to coordinate the right balance of meetings between existing shareholders, new investors, and funds that have previously met with the Company and remain interested in a follow-up meeting. Primary Markets – We believe equal time should be spent in the primary and secondary financial markets. We estimate the “primary markets” (New York, Boston, Chicago, San Francisco) represent approximately 50% of the institutional investor universe. These markets tend to be the majority of the targeting by most investor relations firms and the sell side. Outer Markets – The “outer markets” tend to be overlooked by most companies. Stonegate’s client companies have enjoyed tremendous success in the outer markets and we feel it should be a major component of any institutional outreach program. These markets represent approximately half of the institutional investor universe. The “conversion ratio” (converting a meeting into a buyer) in the major financial markets tends to be lower based on the sheer volume of ideas that flow through these funds. The outer markets are underserved and represent fertile grounds for introducing companies to institutional investors. Institutional investors in the outer markets tend to be more receptive and appreciative of the opportunity to meet with management teams and the conversion ratio can be significantly higher in these markets. Stonegate has developed hundreds of institutional relationships in the outer markets. We have designed a specific program for our client companies in the outer markets and have dedicated sales professionals that focus exclusively on the funds in those markets. Our outer market program is particularly attractive for companies who spend the majority of their time in the major financial markets but fail to target the outer markets. Stonegate’s outer market strategy can significantly improve a company’s institutional outreach program and identify new investors who would otherwise go overlooked. Stonegate is capable of securing a full day of meetings in the following markets: Seattle, Portland, Los Angeles, San Diego, Denver, Minneapolis, Milwaukee, St. Louis, Kansas City, Detroit, Cleveland, Dallas, Houston, Austin, Atlanta, Charlotte, Philadelphia and Baltimore. Anchor Accounts – Stonegate has a specific program of targeting the largest funds (“anchor accounts”) in the U.S. regardless of geographic location. We begin by introducing our client companies and research ideas to our anchor accounts throughout the U.S. If any of these funds indicate an interest in meeting with management, our salesman will then ensure the rest of the day can be filled with other meetings to most effectively utilize management’s time. Most of the outer markets have one or two significant funds, or “anchor meetings”, to target and can easily support five to seven quality investor meetings in a given day. As an example, T. Rowe Price in Baltimore is one of the most prolific small cap investors in the U.S. and should be considered an anchor meeting. If T. Rowe expresses an interest in meeting with your company, you should make every attempt to meet with the fund because they are capable of accumulating 10% of your company’s outstanding shares through open market buying. Once the anchor meeting is confirmed, we then round out a full day of investor meetings while you are in the Baltimore area. Stonegate Coverage Map Institutional meetings and follow-up The institutional sale is a “relationship sale” and the first meeting is only the beginning of the process, not the end of the process. Institutions seldom take a position in a company after meeting one-on-one or “speed dating” at an investor conference without conducting additional due diligence. Fund managers must have a thorough understanding of the business model, industry, competition, management team and other factors in order to make an informed decision. Most companies do not take the necessary steps to maintain a dialog with the funds after the initial meeting. The net result is the fund manager does not get comfortable enough to invest, resulting in a lower conversion ratio of turning meetings into shareholders. This is why NDR’s or investor conferences can be ineffective due to inadequate follow-up. Stonegate’s sales team maintains an active dialog with our institutional investors. Our sales team continues to follow-up with the meetings we arrange for our client companies and periodically update the funds on our ideas. We assist the institutions while they are evaluating a particular company and provide them with additional due diligence materials, access to our research analyst, etc. Proper follow-up is a critical aspect of any institutional outreach program and is where investor relations firms and the sell side fall short. Converting meetings into shareholders Most companies do not monitor their conversion ratio of one-on-one meetings that ultimately turn into shareholders. We believe an acceptable ratio should be in the 20% to 30% range and most companies fall well short of that. The institutional sale is complex and requires proper messaging, targeting and follow-up. Effectively articulating the value proposition is more of an art than a science and can significantly improve your conversion ratio. Stonegate’s knowledge of small cap institutions coupled with a dedicated and focused sales team sets our firm apart from traditional investor relations firms or the sell side. Our team’s extensive institutional relationships and experience creates an unparalleled platform for small cap public companies looking to grow their institutional shareholder base and ultimately realize optimal valuation in their stock. Maintain master institutional database Stonegate provides and maintains a master target list for our client companies. We begin by carefully creating a customized target list from our proprietary Stonegate database. We also cross-reference comparable companies and add their shareholders to our master list. Lastly, we track and rank the funds that are either existing shareholders, have had a prior one on one meeting, met at an investor conference, had a teleconference call, accessed Stonegate’s research report or listened to the company’s quarterly conference calls. We rank each fund (target; shareholder; comparable holder; prior meeting; participant on quarterly call; accessed Stonegate research). All prior meetings are ranked by interested level (high, medium, low) so we can prioritize whether the funds should be targeted for future road shows. Ultimately, any successful institutional outreach program should include a combination of meeting with existing shareholders, prior meetings who remain interested in the company and new potential institutional investors. Our robust institutional outreach program allows Stonegate to quickly access new targeted funds or funds that have a prior history with the company. Manage the sell-side Many companies rely on the sell-side for conducting non-deal road shows or attending investor conferences. While this can be an adequate approach, there are flaws in relying solely on this strategy. The sell-side salesman will typically only target their commission paying accounts and may ignore other important institutional funds. There are a significant number of institutional investors who prefer not to have trading arrangements with sell-side firms, and thus are ignored by those firms when arranging NDR’s. Companies relying solely on the sell-side firms for NDR’s run the risk of missing out on a large portion of investors. Additionally, the sell side salesman may be working on hundreds of research ideas for the firm and does not have the time or knowledge to follow up with the meetings at a high level. The sell-side in many cases are working their agenda, not necessarily your agenda. By working with Stonegate, we will ensure that the entire market of potential investors will be addressed, not just the clients of the sell-side. The Stonegate team will work seamlessly with management and the sell side firm to ensure your road show provides the best meetings in a given market. |
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