The Challenge:
A small-cap company was struggling to move past legacy external disruptions to its business and a historical shift in its provision of forward guidance. The Board was concerned with a languishing stock price, and that the company’s IR strategy and advisors needed review. As a result, the Board retained Alpha to audit the current IR approach, messaging, and visibility efforts in hopes of stemming the decline.
Alpha’s Solution:
- Alpha utilized its proprietary IR Audit/Scorecard tools, which included a strategic perception study and deep dive into the company’s existing IR program.
- Over the first few weeks, Alpha held meaningful, “issues-based” discussions with top shareholders and analysts, which provided directly attributed, candid feedback.
- Alpha then compared the company’s IR KPIs vs. its direct and peripheral peer group, as well as against 200+ combined years of “best practices” experience.
- The result of this research phase was a 100+ page PowerPoint that outlined all of our findings. This work was presented directly to the management team and Board. This included a full review of its messaging, visibility, benchmarking and execution over the prior few years.
- To make that work actionable, Alpha next delivered a two-year, forward-looking messaging, materials, and visibility roadmap to improve communication, increase investor confidence, and diversify the shareholder base.
- Message development and refinement was focused on more clearly articulating the investment thesis, restoring management credibility through direct acknowledgement and management of external challenges, and returning to the practice of issuing annual guidance.
Results:
- The company reinstituted forward guidance and worked to refine the messaging and take a more proactive investor engagement approach, resulting in improved stock price performance and an expanding multiple.
- Leveraging Alpha’s targeting work, the shareholder base mix improved dramatically in the following twelve months, as Value and GARP investors increased their ownership on the back of improved messaging supported by credible financial guidance, helping bring Passive ownership back down to more reasonable levels.
