Not every investor is the same. Some have a higher appetite for risk, others want to play it safe. They also have different expectations for TSR and for growth. The only way to truly understand shareholder expectations is by seeing your business as your investors see it.
There are two ways to view investors: quantitatively and qualitatively.
You can quantify investors by doing an audit of the current investor base. Who are your dominant investors? Which categories are overweight compared with market, industry, or peer group averages? These investors are the ones that are most attracted to your current value proposition. If you aren’t attracting the type of investors that represent a natural fit with your value creation strategy, how can you address the issue?
The qualitative view requires the business to engage in a rich dialogue with dominant investor groups. This goes far beyond what passes as traditional investor relations at most companies; it’s taking the time to really understand investor attitudes and requirements. Ask the tough questions, and listen carefully to the answers.
BCG can help businesses combine qualitative and quantitative measures to deliver a clearer picture of what investors are looking for when they buy your shares. Knowing how investors view your business and assess its performance can help identify and address potential disconnects.