Investors are notoriously sensitive to news or announcements which may affect a company or their investments.
The ability to evaluate investor sensitivity or reactions to news and announcements is a valuable tool for any company’s public and corporate communications teams as well as their external PR and IR advisors. Such insights empower firms, and their communications advisors, to develop effective messaging strategies appropriate for the firm’s investors while also allowing companies to monitor and demonstrate the added value and benefit associated with their messaging approach.
Irithmics estimates and monitors investor sensitivity to news together with investors are more likely to react to news they consider positive or negative. These insights assist investor relations, public relations and corporate communications teams effectively manage and develop strategies and campaigns.
Occasionally, investor decisions and reactions are heavily influenced by the activity of other investors, the effect is often self-reinforcing and can lead to issues of over or under valuation, with the inevitable whiplash of market corrections.
Being reactionary in nature, herding is often sudden and short lived but can profoundly affect the investor diversification and structure of a company’s investor ecosystem. The volatility associated with investor herding makes it difficult to reliably assess investor perception, frustrating a company’s efforts to effectively manage or develop their shareholder register.
The ability to identify, measure and monitor investor herding enhances senior management understanding of what is driving investor behaviour, allowing them the opportunity to execute or develop appropriate corporate and investor communications to mitigate potentially significant detrimental effects.
Systematic Selling or Shorting
Despite many differences between investment objectives, mandates and portfolios of individual investors, there are also often similarities. Particularly noticeable are when these collective similarities give rise to excessive investor-driven supply, either though systematic selling or shorting.
Irithmics assesses the likelihood of collective investor-driven supply exceeding investor-driven demand, providing senior management with meaningful insight into market turbulence, shareholder activity and shorting risk.
Many factors contribute to an institutional investors assessment of a listed company. Increasingly, this goes beyond the financial or stock performance and include aspects of governance, diversity, social and environmental impact. Similarly, the composition and structure of the company’s shareholder register, its maturity and stability often helps influence the perspective of institutional investors.
Irithmics assesses the influence a company’s current investor base is likely to have on new investors, helping investor relations teams develop a well-curated shareholder register.