I(R), robot
NIRI recently advised US IR professionals to ‘understand what artificial intelligence (AI) can do’. Advanced tech tools are nothing new on the Street but IR practitioners tend to be slow movers when it comes to technology; it’s a profession where facetime with investors, analysts and the C-suite is key.
Covid-19 changed all that, of course. With enforced periods at home freeing up time to explore and invest in tech tools designed to make life more efficient, IROs have been embracing new ways of doing things and taking a fresh look at what’s already available.
‘We spent ages talking about [virtual] IR tools,’ says Michael Hufton, founder and managing director of corporate access platform ingage. ‘And we created this virtual roadshow builder – that literally nobody used.’
The company had, ‘by pure luck rather than judgment’, just shipped an update to this tool when lockdown hit the UK. Suddenly, Hufton says, the tool was in demand.
And it’s not just ingage’s roadshow builder that’s getting more traffic. Investor relations, like everything else, has gone virtual and this means there’s more data out there than ever before. So where to start when it comes to putting that data to work?
The challenge for many is that this can be an overwhelming task: there is so much data – meeting records, notes, feedback, shareholdings and much, much more, so a customer relationship management system is crucial.
Having said that, it’s one thing to have information to feed into a system but ‘you’ve also got to have a reporting module that makes it easy to get data out – and get it out in a way that you can use it,’ Hufton points out. ‘It’s about really making sense of all the data you’ve got. And that’s actually much harder than it sounds because it needs to be all in one place and it needs to be mapped together.’ The results can be simple but incredibly useful, he adds: ‘Triangulating the number of meetings you’ve had, at what types of fund, what they own and how that has changed, for example, is very informative. It allows you to say, OK, I met Schroders 12 times last year, and that translated into the purchasing of this amount of stock. Or actually it didn’t: we met it a huge amount and it didn’t buy a bean, and it’s probably just meeting us to find out more about the competition.’
And data has become even more important since the pandemic because, while virtual meeting tools have stepped in very efficiently, Hufton says IROs and investors feel something is lost along the way.
This is where the new age of algorithm-powered tools step in, taking your data up a notch (or a few million notches). Oliver Schutzmann, chief executive of Iridium Advisors, has been busy building new AI tools that, among other things, promise to ‘crack the IR algorithm’. What he and his team have built takes in around 9 mn data points. And it is this level of analysis, impossible for a human, that makes AI so powerful – but also what often makes it so hard to comprehend.
‘Part of the problem is that many people just don’t know what to do with AI,’ explains Schutzmann. ‘But with machine learning algorithms, you can identify valuation risks and opportunities and understand what investors are really paying for when they buy your stock.’ His tool looks at 30 potential risk-and-return factors, offering ‘a really deep insight’ into what’s driving the share price.
Among those 30 risk-and-return factors is investor relations. When Iridium recently published the primer on its analysis with the software, it found that IR quality is the third-most important valuation driver at banks in the Gulf Cooperation Council region. But this is just the beginning for Schutzmann. ‘I think we’ve only touched the tip of the iceberg with this,’ he says. That’s a sentiment that could apply to IR tech tools in general.
Whether you’re at the starting point, ready to try high-powered algorithms or want a mix of both, there are many data-driven tools and services available to today’s tech-savvy IR professional, focusing on everything from targeting to corporate access, company valuation and much more. The future has been here for a while. It seems IR is finding time to catch up.
