From the May 2010 issue of Treasury & Risk magazine

New Tools for Finding, Meeting With Institutional Investors

Changes in Wall Street analyst coverage have made life a little harder for investor relations executives, who used to rely on sell-side analysts for introductions to institutional investors. Some new technology products aim to ease that pain.

Among the offerings is Smart Target, a product from Thomson Reuters that uses its data and analytics to help IR departments pinpoint institutional investors likely to purchase a company's stock, as well as assess whether a company's current institutional investors are likely to change their holdings.

"What we're giving them is a different perspective into their shareholder base, and one that is fact-based," says Bill Haney, head of investor relations services at Thomson Reuters.

Smart Target will be available to all users of the Thomson One investor relations desktop, Haney says.

Bryan Armstrong, a managing director at consultancy FD, says IR departments have been analyzing data to identify potential investors for years. "What is novel [about Smart Target] is that they've been able to automate it," he says. But Armstrong argues that such systems could produce false positives that IR departments would have to work to sort out, and adds that the "human element" remains the basis of IR work. "It's all about creating relationships."

Separately, global brokerage Instinet launched Meet the Street, a Web service that helps get companies together with institutional investors. Big investors can set up a list of companies that they're interested in, and IR teams can use the service to set up meetings with investors.

A survey of IR trends conducted last year by the Bank of New York Mellon found that 69% of IR executives believe that having sell-side firms arrange meetings with institutional investors poses a conflict of interests, given the commissions the firms could earn on trades.

Companies that use Meet the Street can avoid such conflicts, says Instinet spokesman Mark Dowd. The platform can also help small and mid-cap companies that don't have any analyst coverage get access to institutional investors, he says.

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