Q. We are one of the largest companies in our sector. Another company in the sector is facing a major class action from customers, and their stock has been trading sharply lower while their liability (or not) is resolved. Now the whole sector has effectively been marked down, us included. We make completely different products and are likely never to face an action like this – how can I best explain this to the market?
A. A few years ago I would have suggested finding a sympathetic analyst and doing a one-on-one, hoping they would then champion the stock. But now you would face all sorts of issues with the likes of Regulation FD. To get around that challenge, I suggest that you put together a statement explaining the company’s favorable position, making it as short and concise as you can. Then issue this in the usual Reg FD manner. Its brevity will naturally invite analysts to call in and ask for more details at which time you can legitimately suggest a one-on-one. Also, once the announcement has been made, you can organize a conference call Q&A session for the sell side and visit your top ten shareholders to explain in more detail. Frankly, the whole sector is bound to be affected, but your goal should be to outperform your afflicted peer in relative terms, rather than your own stock price in absolute ones.
Q. September 11 affected our share price as we are regarded by the market as being very exposed to the business travel sector. That was true a year or so ago, but even before the tragic events of that day we were successfully diversifying our operations, and since then have continued to do so. However, we are still rated as if our exposure remains high. How can I get the word out that we are not suffering as badly as people think from the fallout?
A.This question is very like the last one and so, probably, is the answer. The problem is that you have good news at a time when your voice is likely to go unheard or at best be disbelieved. My suggestion here is either to adopt the approach suggested above, or to employ some sophisticated public relations, since a well thought out piece in a highly regarded newspaper or magazine might be the answer. It could review the company’s success in diversification during recent times and point out how fortuitous this strategy was given the events of September 11. Provided you entrust this to a good enough public relations practitioner, they should be able to find both a suitable angle and a suitable journalist. Then mail the piece, once it appears, to all the key sell-side and buy-side analysts. You’ll be amazed how much more credible a story is if it comes from a third party.
Q. Some of our most successful businesses operate in various parts of Europe and I would normally organize a field trip each year for the buy and the sell side. After September 11, several of our key shareholders are nervous about flying. What can I do?
A.Fly them there yourself. A commercial pilot’s license is becoming an absolute prerequisite for every successful IRO. George Stinnes at British Airways and Ian Harding at Kingfisher have both been known to fly their shareholders to site visits. So why not you?
