by Bill Mahoney

Next, executives must understand the value of being open and forthright with the investment community. Today’s market provides a wonderful lesson, namely the narrow scope of companies showing stock price gains based on improving performance. Yours may be one of the 3,000 companies Lev estimates to be growing steadily but still ignored.

Then there must be a clear understanding among executives and the investor relations team about what’s determining and driving your stock price. This understanding may exist already, but chances are, it doesn’t. So sit key members of the executive team for as long as it takes to dissect the true drivers of value in your company. Analyze every aspect of operations. And survey the investment community to gain a market perspective on what drives your company’s valuation. After all, it’s the market’s buying and selling of shares that determines your company’s stock price. Update this feedback regularly. It changes.

Want to get really sophisticated? Conduct multi-regression correlation analysis to verify the value drivers that really determine stock price. It’s a complicated analysis. A few companies have capabilities internally. A number of consultants specialize in it.

Now the company is ready to focus strategies on value creation and communication on the information that matters. It’s important to focus that information and relationship-building effort on analysts and investors with a true potential interest in the company. This is where targeting comes into play, especially on the buy side.

Targeting resources continue to become more sophisticated. Targeting consultants increasingly do a better job of analyzing institutional portfolios to identify the key factors and variables comprising the investment discipline behind the specific portfolio.

Anywhere from a handful to dozens of variables are built into the analysis, depending on the targeting consultant. These analyses help companies identify institutions with highest compatibility based on comparing portfolio characteristics with the company’s financial and operating characteristics.

From a deeper understanding of an institution’s investment discipline and the variables of greatest interest to a portfolio manager, IR practitioners can determine the critical information to supply. Information can be customized for each institution and fund manager. The story can be told that offers the greatest appeal in creating an attraction.

If you believe your company is undervalued because not enough is known about it - essentially, it’s being ignored - the challenge is to get analysts and portfolio managers to be motivated to take the time to learn about it.

The equation is in place; sell-side analysts and institutions to target are identified and so is the relevant information. Now the hard work begins. Building analyst coverage and selected portfolio manager awareness and interest takes elbow grease. Ultimately, success depends on contact and the effectiveness of the communications effort.

Use the main communications vehicles at your disposal. Today, they consist of an information-laden IR web page, an equally informative annual report, regular releases to update financial and operating developments, conference calls, daily phone and e-mail contact and meetings, meetings, meetings.

If at first you don’t succeed, try, try again. At the end of the day, it’s all about persistence and hard work. You’ve been doing that? Keep at it. Don’t get discouraged. Your mission is to break through and move your company off that list of those that are being ignored by the market.

Bill Mahoney