Roadshows, targeting and investor base constitution
Roadshows, meetings and events
Small-cap companies typically hold just over half the average number of meetings held by companies regardless of cap size. The gap between small-cap and all-cap investor meeting numbers is the same in 2019 as it was in 2012, with small-cap companies having an average of 91 fewer meetings than the average for all companies. In the intervening years the gap between the two has grown to more than 100, but has never varied too wildly.
Small caps also go on fewer roadshows and attend fewer investor conferences, going on 2.7 fewer roadshows and attending 2.3 fewer conferences than the averages for all cap sizes. Small-cap companies spend fewer days on the road per year, too, and go on the road with fewer brokers.
Analyst coverage
Sell-side analyst coverage is typically much lower for small caps than is the norm for companies of other cap sizes. The average number of analysts covering companies across all cap sizes is 14.1, while for small-cap companies it is just 5.4.
Analyst coverage increases dramatically with cap size, with mid-cap companies having more than twice the number of analysts covering them as small caps and mega-caps approaching five times the small-cap coverage.
Targeting
Direct targeting of investors is more common at small caps, with 45 percent of potential investors directly targeted by small-cap IR teams, compared with 37 percent among all caps. Reliance on brokers for targeting has fallen, with 21 percent of small caps seeing a decrease in their use in 2019 and 13 percent seeing an increase.
Looking at criteria to use when targeting investors, small-cap companies are more likely than other companies to focus on peer ownership and sector focus. Just 9 percent of small caps specifically target SRI investors, compared with 18 percent of all caps.
A quarter of small-cap investor-targeting efforts result in a stock purchase and it takes an average of 3.7 meetings with an investor before it takes a position in the company, 0.7 fewer than the all-caps average.
Reporting
Outside of financial reporting, the frequency of reporting is slightly lower among small caps than at other cap sizes. Slightly more than a quarter of small-cap companies report on qualitative issues such as business model and risk factors at least quarterly. This compares with a third of companies across all cap sizes.
ESG reporting
Small-cap companies are less focused than other companies on ESG issues. One fifth of small caps produce a separate ESG report while almost a third do not report on ESG at all. Just 16 percent have a dedicated sustainability team responsible for ESG communications, with responsibility often falling into the hands of the corporate communications team.
Less than a quarter of small-cap companies have engaged with ESG investors and analysts by holding group meetings, going on an ESG-focused roadshow or attending an ESG-focused investor conference. Just 17 percent have any meaningful engagement with ESG ratings agencies.
Small-cap companies are also behind other companies in terms of hard data for ESG. While 47 percent of small caps report on employee-related KPIs, around four in 10 report on governance and environment-related KPIs. More than half of companies across all cap sizes report on these issues.
Future goals
When asked what their primary goals are for reporting over the next three years, the focus is to make a clearer link between strategy and financial results. More than four in 10 have this as their top priority, with increasing reporting around ESG issues a distant second on 16 percent. Priorities for small caps here closely mirror the priorities for all cap sizes.
Earnings guidance is slightly down at small caps, with 36 percent not providing any compared with 29 percent for all caps.
Shareholder structure
Small-cap companies have fewer institutional shareholders and more shares held by individuals and founding families than do companies of other sizes. Small cap is the only cap size where a minority of shareholders are institutional investors.
