As hard as it is for some people to believe, there are INVESTORS in the micro and small caps. I think that most people believe that it is a trader dominated market and company and “IR” efforts are geared to appeal to TRADERS. Traders can provide the “instant gratification” that nearly all companies and IR entities are looking for.
If you want to appeal to investors, you work on the company and make it appealing from an investor’s perspective. (I talked about this at length in yesterday’s post.)
If you want to appeal to traders, then focus on the stock; the company could be on a planet revolving around a distant planet because the company, its products, services etc are irrelevant to traders…
Toward the end of 2008, I decided to ask every investor (not trader) why they invested in a particular company regardless if that company was a client or not. More particularly, I asked them how they came about finding out about the company.
To define investor, it is someone that holds the stock for weeks, months or even years as opposed to a few hours to a day which is the case with most traders.
To date, I have 772 investor responses in my database and I think, after 3 years, it is high time to publish the results.
It goes without saying that all 772 of the investors invested in the company because they felt that the company had a bright future.
However, here is the most interesting statistic:
97% of the investors that took long term positions in micro cap companies “discovered” the company they ultimately invested in via the Internet Search Engines.
The other 3% received an email or found out about the company they invested in through a stock message board or other investing forum.
It clearly illustrates what I have been writing about for some time – you are not going to find investors with email pumps, bloviating on message boards or in chat rooms. You have to go where the investors are – They are on the Internet using a web browser to find investment opportunities.
You wouldn’t go to Antarctica to hunt elephants would you? So why go hunting for investors where traders hang out?
So, I have to wonder… How many thousands of great companies that were publicly traded ended up going out of business not because their business sucked; it’s just that no one ever knew they existed…