Broadening Investor Awareness through Outreach

The Situation

While a niche-industry cloud-based client had been a high-flier in the Dot.Com days, it continued to maintain a strong balance sheet and attract value investors. However, revenue declines in its legacy business had been overshadowing revenue growth from new product lines. Just as the company’s new business began to overtake the old, the recession hit. The company’s superior products and valuable service successfully maintained its customer base, yet the majority of its customers temporarily reduced the scope of their services. As the business model employs 12-month contracts, it took a full year to for financial results to reflect new contracts. By mid-2010, the business had turned the corner and the company brought in a new CFO to increase investor awareness and engage with Wall Street.

LHA’s Solution

• Updated collateral material including the Fact Sheet, presentation and website to present the new investment rationale.
• Completed a detailed investment community targeting process to identify:
  • Sell-side analysts interested in niche business services, cloud-based businesses and turnaround growth supported by a strong balance sheet.
  • Buy-side investors interested in undiscovered, micro- and small-cap companies that possessed the attributes mentioned above.
• Targeted investor conferences known to be a good use of management’s time.
• Calendared activities to optimize management’s time
• Scheduled events including investor conferences, non-deal roadshow days arranged by LHA and by sell-side analysts (both covering and non-covering targets), roadless roadshows during which LHA arranged a series of conference calls with investors, and appropriate online investor events.
• Delivered itineraries and profiles of investors to prepare management for meetings.
• Managed logistics for conferences.
• Secured feedback to determine how investors were evaluating management and the story.
• Delivered recommendations for investor relations program improvement and next steps.

LHA’s Results

Over a 12-month period, management participated in 18 roadshow days and 5 investment conferences. When combined with on-site meetings and roadless roadshow phone calls this yielded 283 one-on-one events. This compares with the prior 12-month period, which included 8 roadshow days and 5 conferences for a total 123 one-on-one events. Through LHA’s investor outreach efforts, the client secured sell-side coverage from 3 analysts, increasing net coverage by 2 analysts to 6. Trading volume rose from approximately 45,000 shares to approximately 200,000 shares per day and institutional ownership increased from 60% to 80%, with the number of institutions rising from 65 to 115.