sponsored research a strategic tool for investor communications gabriel didham cfa, managing...
TRANSCRIPT
Sponsored Research
a strategic tool for investor communications
Gabriel Didham CFA, Managing Director
www.ObjectiveCapital.com
2
Research
is the language of
Investors
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Research defines how the market understands
your investment story
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… and it is
Research that drives your relationship
with the capital markets
5
– 93% read pre-IPO research– 53% read research before meeting
management
Of professional investors...
6
For private investors …
Source: Communicate Research
Most relied on information sources for private investors
0%
20%
40%
60%
80%
Thefinancialmedia
Analystresearch
FinancialWebsites
The generalmedia
Stockbroker Companywebsite
Family &friends
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Research makes a difference ...
• Researched companies can have up to double the market valuation of un-researched companies in the same industry
• Increased research coverage can double average trading volumes
• Trading costs can be as much as 10% of the share price on under research companies
8Source: JCF Factset /Objective Capital
"Valuation" of companies in the FTSE AIM All-share
0.0
2.0
4.0
6.0
No coverage 1 analyst 2 analysts 3 or more analysts
Ave
rag
e M
arke
t C
ap/N
et A
sset
s (x
)
Level of coverage preferred by Institutions
9Source: JCF Factset / Objective Capital
Trading cost for companies in the FTSE AIM All-share
0%
4%
8%
12%
No coverage 1 analyst 2 analysts 3 or more analysts
Ave
rag
e b
id-a
sk s
pre
ad (
% s
har
e p
rice
)
Level of coverage preferred by Institutions
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… for a company and its shareholders
A lack of research means:
– raising capital is more difficult and expensive
– lack of knowledge => higher trading costs => reduced liquidity
– lower share price
Up to 80% of quoted companies could benefit from more research
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The issue is how to get research coverage
• Companies have traditionally relied on brokers and investment banks
• But for smaller companies:
– brokers’ fragmented distribution means multiple coverage is needed
– whole segments of the market are untouched – regulation means you need separate coverage in each
market– and widely known to only be economic for brokers
when linked to investment banking
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So how can Sponsored Research
solve these problems?
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High quality Sponsored Research delivers:
• Reach:– professional investors– private investors– buy side– international– industry– debt and equity
• Quality coverage:– supports trading in your stock– corporate transactions– supports your other advisors– and wide-ranging generation of business opportunities
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High quality Sponsored Research demonstrates:
• Commitment to shareholders
• Commitment to transparency
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but most importantly…
It builds a “Strategic Relationship” with the capital markets
a relationship that supports a company now
…..and as it grows