The dividends of retail investor longevity and loyalty
For those companies investing time and resources into retail investors, there are advantages in addition to the obvious shareholder gains.
‘It is evident that engaging with retail investors can bring a whole number of benefits to public companies,’ says Ian Selig of Safehold. ‘Their increasing level of sophistication and investment potential can benefit a public company’s liquidity, price volatility and market efficiency. Additionally, retail investors typically side with management on proxy votes.’
One important benefit is the longevity of investment, notes BASF’s Andrea Wentscher. ‘We highly value our retail investors as they provide a stable and reliable shareholder base,’ she says. ‘According to an anonymized evaluation of our share register, approximately 90 percent of our private investors still hold their shares five years after purchase and more than 70 percent still hold them after 10 years – much longer than most institutional investors.’
Fraser Ramzan of M&S points to examples that showcase where retail investors can throw their weight behind the company to influence important decisions.
‘The power of retail shareholders shouldn’t be underestimated and M&S has historically always appreciated its retail shareholder base,’ he says. ‘In 2004, retail shareholders played a crucial role in blocking Philip Green’s takeover of M&S and, more recently, participation rates from retail shareholders were high when M&S bid to become joint-owner of Ocado Retail.
‘Additionally, by investing in digital AGMs and tailored communications for our retail investors, we have seen greater overall shareholder engagement.’
Engaging with retail investors can bring a whole number of benefits to public companies
