by Susan McDonald
When shareholders -- or potential shareholders -- want to get information about a company's financial position, ask about its strategies for growth or even check out a rumor circulating on the grapevine, who can they call?
For many public companies, the solution is to establish an investor relations department to provide a communication link with stockholders, Wall Street analysts and other members of the financial community.
"Investor relations is like public relations on financial steroids," said Terry McWilliams, president of Mozaic Investor Relations, a Louisville firm that provides investor relations services for several Louisville-area companies. "It's a lot like public relations in that you're communicating with audiences. But with investor relations, you're marketing to very specific and very knowledgeable audiences."
Those audiences include shareholders, analysts, stockbrokers, mutual fund portfolio managers, potential investors, and "people who, for whatever reason, are just interested in what a company does," McWilliams said.
Investor relations professionals at publicly held companies split their time between initiating communication with the investment community through reports, conference calls, presentations and other tools, and fielding questions about the company's financial position and operations.
For Regina Nethery, senior director of investor relations for Louisville-based Humana Inc., calls from individual shareholders "come in waves, but they aren't nearly as frequent as the calls from analysts," she said.
The questions she receives also vary. While Wall Street analysts frequently want very technical information, individual stockholders often are concerned primarily about the performance of the stock, she said.
"If there have been any bumps up or down in stock prices, they may want to know why the stock is moving, or if they think the stock price is kind of low, they'll want to know what we're doing to get it up," Nethery said. "I usually walk them through the strategy for the company and talk to them about our turnaround plan, and the strategic plan that we have going forward."
Nethery also receives more calls from "people who just have a smattering of shares, because the institutional investors have their own analysts," she said.
But even small investors deserve consideration, said Dru Milby, chief financial officer for Papa John's International Inc. in Louisville.
"When someone calls me, I don't ask how many shares they own, or even if they own shares," Milby said. "Whether you own 10 shares or a million, I think you deserve the same treatment."
Like Nethery, Milby has found that small investors typically have different concerns than large ones.
"Individual investors ask more operational questions like, `How do they know my name when I order pizza?' But the questions from institutions are driven more by earnings, strategy and technical issues," Milby said.
In addition to the usual issues raised by investors, Chantelle Kammerdiener, director of investor relations for Churchill Downs Inc., gets questions that are unique to her organization.
"Shareholder passes (to the racetrack) are a big item of interest, and a lot of people ask if they can get better access to Derby tickets if they're shareholders," Kammerdiener said.
Predictably, calls often increase when a company is in the news. Recent publicity about lawsuits involving Papa John's and rival Pizza Hut prompted increased calls to Milby's office, and rumors about possible new racetrack acquisitions typically cause Kammerdiener's phone to ring more frequently.
Investment relations managers frequently are involved in preparing information for dissemination to shareholders and the financial community. Kammerdiener, Milby and Nethery direct production of their companies' annual reports, as well as news releases dealing with financial issues.
In addition, Milby coordinates quarterly conference calls that are open to analysts, shareholders, the press, the public and even the competition, she said.
For Milby and Nethery, selling their companies to stock analysts and investment advisers also is on the agenda.
Nethery meets periodically with major shareholders and already has conducted about a half- dozen investor conferences this year, in addition to hosting analysts and investment managers who make on-site visits to Humana's Louisville headquarters, she said.
Hosting investors and analysts at the Papa John's corporate offices is a good way to help them understand the company's business, said Milby, who also participates in about a dozen outside analyst presentations each year. "We love to have them come here so we can feed them," she said.
"We have some people who come from different parts of the country who have never had our pizza, so we can show them where and how we make it," Milby said.
While many investors are fascinated with the operational side of the business and the story of Papa John's quick rise to success, some are more narrowly focused on the numbers, said Milby.
"Some people really want to understand the fundamentals of the company, and other investors have statistical models that determine when they buy and sell," she said. "That's OK, and I don't waste time helping them understand the story, but other people are just fascinated with it, and we feel like when they understand our business, they can do a better job of telling our story to others."
Milby also has found audiences for investor information in students and investment clubs.
"One of the biggest things now in business school training is to look at real companies as opposed to textbook examples, so we try to accommodate those needs to the extent that we can," she said. "They're also customers or potential customers, so if I can do something from the investor relations standpoint that can benefit operations, I'm going to do that."
(Susan McDonald was a contributing writer to the Cincinnati Business Courier, where this article was originally published.)