The investor-corporate dialogue remains one of the most important avenues for unlocking the value of a long-term corporate strategy. Research has revealed that having a significant long-term shareholder base is associated with positive outcomes, including higher return on invested capital, greater allocation towards value-creating investments like R&D, and reduced reliance on quarterly guidance.

Still, companies struggle to engage shareholders to support their long-term strategy, and there remain serious disconnects between investors and companies in the engagement process. Tailoring engagement strategies to long-term shareholders provides a solution to this dilemma.

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Attracting the right shareholders can make or break a long-term corporate strategy. But many companies struggle with how to engage shareholders to support their long-term strategy and instead focus on the broader investment community. Creating a targeted shareholder strategy can unlock significant long-term value.

Research of 250 of the largest companies across the U.S., Canada, and Europe revealed that the presence of a notable long-term shareholder base is associated with positive corporate results. All else equal, a 10% increase in the proportion of long-term shareholders is associated with:

However, responses to our survey of 50 companies and investment organizations, including FCLTGlobal members, show that major gaps exist in current engagement experiences between companies and investors.

Over 60% of corporations surveyed face hurdles in attracting long-term-oriented investors.

85% of investors surveyed aim to talk to either senior management or the board of directors when engaging with their portfolio companies, but only 40% actually do.

50% of corporations surveyed aim to talk to portfolio managers when engaging with their shareholder representatives, but only 28% of them actually do.

Only 50% of the companies proactively tailored their investor communications by investor type, even though 90% of investors consider who else holds the stock.

Understanding a company’s shareholder base can provide support for its long-term corporate strategy. Segmenting a company’s shareholder base – and tailoring engagement strategies to long-term shareholders rather than the entire investment community – is the key to unlocking long-term value. To strengthen this alignment, companies can leverage shareholder base characteristics to engage with the right people. To learn more, read Unlocking Value by Targeting Long-term Shareholders.

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