The market advantages of agile retail investors
In conclusion, Samco Securities' Jimeet Modi notes that retail investors, once an afterthought for Wall Street’s major players, have become a force to be reckoned with.
‘These investors aren’t bound by the bureaucratic processes of large institutional funds such as committee meetings, approvals and other administrative hurdles,’ he explains. ‘They can be much more agile and move quickly to take advantage of market opportunities and can make investment decisions on their own, without having to wait for approval from a corporate mandate or board of directors. This agility can prove to be a significant advantage when it comes to potentially outperforming the market.'
According to the Motley Fool's Mike Price, retail investors today make up about 10 percent of the daily trading value of the 3,000 biggest US stocks – that’s worth about $40 bn per day. Where retail investors once had little to no influence on the market, they can now move stocks with billion-dollar market caps relatively easily.
‘It’s important to have a well-maintained and up-to-date IR website as this is often the first point of contact. Shareholders must be confident they will always find the most relevant information on the IR homepage.
‘A strong social media presence is also important. In our view, LinkedIn and X (formerly Twitter) are the most relevant channels for financial market communication but there doesn’t necessarily have to be a dedicated IR channel. If colleagues in the communications department are already active on these channels, it may be possible to work with them and add IR-relevant content.
‘Personal contacts, such as presentations at local banks, are also highly valued.’
– Andrea Wentscher, BASF
‘As IROs, we are storytellers, so thoughtful communication with your retail constituency is key. At Safehold, we’ve built a database of more than 8,000 ‘sticky’ retail investors to whom we regularly communicate company news and events via email blasts.
‘We’ve also partnered with media platforms, doing interviews and creating content to build awareness. A crucial driver to our success has been consistency: that constant visibility facilitates familiarity with our firm’s story, serving to build a personal rapport with a broad scope of retail investors.’
– Ian Selig, Safehold
‘Invest in digital and interactive formats for AGMs to make them as accessible as possible for retail shareholders. After undergoing the lengthy process of amending our articles of association, we can now host digital meetings for shareholders, with successful results. We have been holding digital-only meetings since the pandemic, with participation trebling in the last three years: 561 people attended our 2019 physical meeting, compared with 1,700 individual shareholders who engaged with our digital platform.
‘We also use journalists to act as live shareholder advocates, putting shareholders’ questions directly to the chairman and executive team. This builds trust in the digital format as the purpose of the shareholder advocate is to ensure the board is not ducking difficult questions.’
– Fraser Ramzan, M&S
