Mark Fasken: This is Winning IR, a podcast exploring the diverse insights within the IR community. Join me Mark Fasken, as I sit down with IROs and other IR stakeholders to discuss the winning strategies, tactics, and shifts in thinking that are redefining the profession. It's no secret that investor targeting is top of mind for IROs and executive leadership in many public companies.
With volatile market conditions resulting in constrained access to capital, having a diverse shareholder base is more important than ever. I've had the pleasure to host a panel with today's guest on this very topic before, so I'm excited to share his insights with you all today.
Scott Einberger is the IRO at JLL , and is a seasoned IRO with over 20 years of experience in investor relations and finance, including 17 years at US Foods.
So Scott, you and I have been on a panel in the past in Chicago and something that surprised me was just how involved you are in the targeting and outreach process at JLL. I mean, JLL is a big company. Well held from an institutional perspective. Can you walk us through your approach and your thinking as it relates to targeting?
Scott Einberger: Yeah, hi Mark happy to do that. And really enjoyed the time we spent on our last panel. So hopefully this will be just as good.
Mark Fasken: Even better.
Scott Einberger: Even better. Yes.
I've always enjoyed targeting. It's something that. I've just had a good experience with in my past and the outreach piece that goes with it, I think is important also.
So maybe we can talk a little bit about that. But when I'm building a targeting list, really what I'm trying to do initially is just put together a comprehensive list from a lot of different data sources that I can use as a starting point. And so I'll take things, you know, like from Irwin, and they have a great recommendation tool in there for targets and I'll pull firms from that list.
I'll look at peer ownership, 3rd party lists, some, a good source of information is banking partners. You know, I've worked with my treasury group in the past where they've had recommendations and the banking partners will send you a targeting list where you can get a lot of good information from. And then the sell-side is a good spot also.
So really what I'm trying to do is just get all of that data together into 1 list. And I'm really not worried initially about trying to filter the list or sort it in any way. I just want to try to get a list of firms together and use that as kind of my starting point or a database, so to speak to begin with.
Mark Fasken: Just a follow up question on that. When you get those lists from sort of your banking partners and everything, do you find that those, or are you asking that they often come with some sort of explanation on why they're part of the list? Or are you sort of just getting an Excel spreadsheet that's saying, here's a bunch of institutions and their AUM and maybe some of the peers that they own?
Scott Einberger: It's a little bit of both. You know, I do like to get the color behind it. So I will ask for that a lot of the time. Why did you recommend this firm? Or how did you put together your targeting list? Did you look at peer ownership? Did you look at market cap? Did you look at who's a good fit from a value of growth perspective for my firm?
So I've tried to do that in the past. Sometimes you get varying degrees of information back. I feel like where it's some is more valuable than others. But I think that's a good, a good starting point.
Mark Fasken: Awesome. So now you've got sort of this big list of names. What's the next step to start to refine it?
Scott Einberger: Yeah.
Yeah. So now that I have this list together, I really want to start to sort it and rank it. And so I, for me personally, I like to do some of that research myself, and so I'll go in and use my IRM tool, and I'll start looking up firms and contacts and try to get a feel for who's on my list and
One of the things I'm looking at is who have I talked to recently? I think that's one of the key aspects of this is if you have somebody who you've talked to recently, you know that they're interested, right? And that's a great starting point. And those are firms that I want to move up to the top of my list.
I'm also looking at peer ownership. Like we talked about who might own our peers. I think that's a good way to kind of get a feel for who's interested in the sector or in your industry. And then you could really leverage that as you have conversations. And a couple other things I look at is the position size.
When I'm targeting, I want to try to get firms who can take a meaningful position in my company. And so, usually I want to try to start with the larger firms and then kind of work my way down. And so I'll take that into consideration as I put together the list. And then I also kind of look at who's owned us in the past, right?
You may have past owners who aren't current owners, but obviously had an interest at one point and something happened with the story where maybe they disengage, but you are of an opportunity to kind of win them back. And so I factor all of that in. And then what I try to do is start to rank order some of the firms.
And at this point, I'm not really worried about trying to necessarily get to a top 10, which is kind of my ultimate goal. But I just want to get a kind of a rank order list where I can start to then put firms into large buckets, like here's the top list, a middle list and a bottom list.
And then from then I'll try to start refining it a little more.
Mark Fasken: That's great. One question I have for you is you mentioned a few of the data points that you use to decide and sort of stack rank those investors. I mean, we've talked about this in the past, with Irwin, we have our fit score technologies, it's one thing, but there are people who talk about using machine learning and, and, and artificial intelligence and whatnot, and are pulling in hundreds of different data points.
Like what's been your experience with solutions like that? Do you find that they work or do you find that sort of like the simpler approach is better. Do you have an opinion on that?
Scott Einberger: I've always found the simpler approach is better. I think that some of those AI tools and some of those scoring systems can help you directionally, but I haven't found them to be overly accurate.
At least in my experience, I've had a number of top holders in the past to have a very low score when you look at whether it's that ranking or the suitability score without whatever it be, and so I take that with a grain of salt. And if you have a high kind of fit score, I'll maybe I'll reach out and I'll put you at the top of my list initially, but for me, it's really just one factor across a number of metrics.
I'm trying to look at. Yeah.
Mark Fasken: Well, I think even on that panel we had, there was some discussion in the room of people saying one of the challenges with that approach is that you do lose some of that context, right? I mean, when you're talking about past interactions and things or previous holders, all of that stuff is super helpful, but it sometimes it can get lost in the hundreds of different data points are being pulled in. It's not a, not a criticism of other of other ways of doing it it's definitely been a topic of discussion over the years in terms of how to approach targeting
Scott Einberger: One thing I've found is that, , you kind of look at that score and it's based on a lot of different metrics, right? And a lot of them are financial metrics and, but firms have a number of different funds they're running and strategies, and those change all the time. And they may be introducing a new fund or a new strategy that you could be a fit for that really isn't factored into that score.
Right.
Mark Fasken: Okay, so that's great on sort of your approach to targeting and sort of how you pull together these names and how you stack rank everything.
My other question, you talked about banking partners and sell side, how much of the targeting work is done in house, versus working with brokers or other third parties?
Scott Einberger: I like to do almost all of my targeting work in house. That may just be my personal preference and, and feel for it. But I've just [00:08:00] found, I think, over the years that I can get equal or better value doing it myself than I can using a third party.
And, and that's, some of that's just, I've built over the years, this kind of database of firms and contacts that I can go out to and utilize. And, and I feel like, you get you kind of build those relationships and then you can leverage them in the future
Mark Fasken: Yeah, what would you say, we we have a lot of conversations with IROs about targeting. A lot of people say they don't have time for it. And I think, I don't know if it's just a misconception about the amount of time it takes or what is required of them. I mean, clearly, you know, you work for a very large company, you wear a lot of hats.
I know that from having, you know, a number of different conversations with you that you're, you're very busy. What would you say to somebody who's thinking, you know, I know that I need to do targeting, you know, it's important, but I don't have the time.
Scott Einberger: I think that really the biggest time commitment is at the beginning, trying to get that list together and then rank it. Really after that, I don't feel like I spend a lot of time targeting, maybe a couple hours a month, you know, I'll try to update the list when we go to conferences and I see who's on our conference list. I'll maybe move some firms around.
And get a feel for who's interested in us. Really, once you have the list going, updating the contacts and maintaining it doesn't take a lot of time. And then, once a quarter we're going in and looking at ownership when the 13Fs come out and see who may have changed their share position.
And we'll do some updating at that point also. And get a, a feel for what's happening , ownership base. But even that initial piece, if you think about how long it takes me to put together, maybe that master list, if you will, it's, I don't know, maybe 10 or 15 hours of work and you can spread it out over, multiple weeks or months to get that list together.
So I haven't found that it takes a significant amount of time. I think that's maybe more myth than it is truth.
Mark Fasken: When we think about you build a list, that's one thing. And then there's the actual outreach and meeting with the targets are speaking to the targets on that list, which is, becomes the tricky part a little bit.
So it sounds like a lot of that is happening at conferences, but you're also correct me if I'm wrong. You're doing also some just direct outreach to some of those firms to say. Hey, I may not meet you at a conference this year, but I'd love to have a conversation. Is that correct?
Scott Einberger: Yeah, absolutely. I'm doing that all throughout the year.
I do it when we announce earnings. I'll reach out to the firms on my target list, and I'll ask them if they just want to have a call to touch base and maybe talk through the quarterly results. Okay. That's a good way to just get the ball rolling, get them interested and, and then I'll follow up if we're doing an NDR and we're going to be in a specific city, , I'll reach out to firms that are on my target list for that city and I tend to do NDRs both with the sell side and self organized NDRs, and I found that I can get a little better result with the self organized NDRs I get a little higher quality meetings more long only. And I can customize my outreach list a little bit that way. You do have to be patient with it, because not everybody will respond immediately and it takes a little bit of effort to try to to follow up and make sure you're you're staying on top of it.
But I think if you kind of get that ball rolling, you can have some good success doing your own outreach and scheduling your own NDRs.
Mark Fasken: That actually sort of gets into our next question, which is just talking about quality of meetings, so you're, you're finding that you are getting some higher quality meetings and doing your own outreach and talking about sort of doing your own outreach and doing some of your own NDRs, any tips or tricks on how people can be more successful in their own outreach or in setting up their own, their own meetings?
Scott Einberger: Yeah, I think trying to build relationships is important, and I always try to find the analyst who covers my industry or my sector, because I really want them to build the model and do all of the background research that the PMs are then going to use when they make an investment decision.
And if I can get to the analyst, then I'm already halfway or more of the way there to winning a target. And so that's where I try to start. And those are several different ways. You can go about that. A lot of the larger firms have corporate access groups that you can reach out to and ask who covers your industry.
I think that's a good starting point in a lot of cases. I'll also ask the sell-side sometimes. They can be a resource at some of the firms and then, another good way to do it is looking at conference lists and seeing who pops up on your list. Like, I've. I've got a number of targets, actually, from the initial conference list that I've had of people have requested a meeting.
And then I found that a lot of times those meetings change and people drop off of your conference list. And when you actually get to the conference, it's a shorter list or the list has changed. But that initial list. You know that there was some interest from those people originally, right, to request a meeting.
And so that's a good source also. And a lot of times I can get analysts names from that and then start to reach out to them individually.
Mark Fasken: You made another point, which was, which I thought was interesting. I've never really thought about that before, which is also talking to your current shareholders about potential targets.
Is that maybe you can expand on that a bit?
Scott Einberger: Yeah, I've done that a number of times in the past where I've just asked a current shareholder, if they speak to somebody at a specific firm, or do they have a contact there that they know? And everybody in the investment community is talking frequently amongst themselves and they have contacts.
And I found that they're actually really willing to share that information a lot of the time. If they're a shareholder of Of your company, they have a vested interest and they, they want your share price to do well, just as, just as much as you want your share price to perform well. And so, you know, they're, they're willing to share some of that information and I've got some good leads that way with firms that I didn't necessarily have a contact at, but it got an introduction and then you, it's even better than reaching out cold, right? Because you're having somebody introduce you and you already kind of have the beginning of that relationship and your foot in the door, then..
Mark Fasken: That's a great idea.
And I think viewing those investors to your point as, as partners, right? It's a win win for them if they can make an introduction and that all works out. That's a great idea. So the next question is, it almost relates back to the question I had about investment of time and setting the right expectations around targeting.
What is your goal? Like what is, what is the outcome when you think about, okay, I'm going to. I'm going to build this list of investors. I'm going to do some of this outreach. What does success look like for you?
Scott Einberger: Yeah. So we talked about building the list and then ranking it. Usually what I try to get to in the end is a top 10 list that I can really be proactive with throughout the year.
And, I want that to be flexible, right? I may start reaching out to firms and I may find out that some are not interested, but there's others on my list that could be. And so, I want to evolve that list as we go along. But ultimately, I want a top 10 list where those are the firms that I'm really focused on this year.
And my goal every year is to convert at least 2 of those firms and have them be shareholders. They don't need to be top 10 or even top 20 shareholders initially, but I want them to have enough capacity and AUM to take a meaningful position in my company over time. And then I can build and cultivate that relationship as we go along.
And hopefully they build their position size over time. But that's my goal. And it. I found that it takes kind of 4 to 6 meetings really to get a long only involved. And so you need to have those upfront meetings with the analyst to get them comfortable and to build the model. But then you need to have a couple conversations with the PM and then ultimately they want to talk to your CEO or your CFO and you probably need to have at least 1 or 2 conversations with the C suite before they'll take a meaningful position and so you just have to understand that timeline and that it, it could take multiple months to, to really convert a target.
Mark Fasken: And I'm sure that it, it varies widely, but what would you say is, is sort of the average timeline that you see? Is it, is it a year? Is it a bit less? I'm sure in some cases it's multiple years, but
Scott Einberger: Yeah, it, it could be multiple years, I would say.
I start to have conversations and you've had one or two conversations, probably six months, maybe nine months is a reasonable time frame. You know, they're going to do some research. They're going to want to get comfortable depending on how familiar they are with the industry and your particular story.
They're going to want to spend some time digesting that. Some of the investment firms have to go to committee. Depending on what the firm is and how they're structured, so that could take a little bit of time to get approval for the PMs to buy a certain equity. And so that, that, that 6 to 9 month period seems like a reasonable amount of time for me, you know, I've had some firms where I, I've reached out to them and we've had an initial conversation and it kind of went cold for a little while and then I followed up again and, we had another conversation 6 or 9 months later and the ball started rolling and.
Yeah, so sometimes you're right. It could take a year or two before they really the timing is right for them and they have a spot in their portfolio for you.
Mark Fasken: So it's it's sort of convert 1 or 2 that can take 4 to 6 meetings and anywhere between 6 months to 10 years.
Who knows? Okay, that's great. The other we actually sort of covered this, we're talking the criteria that you use to determine which are, which investors are the right fit for you. So we talked about peer ownership, sector ownership. Do you also look at things like, do they invest in companies with similar fundamentals or are there any other criteria that you're using that we haven't covered yet?
Scott Einberger: I do look at fundamentals. For me, it depends a little bit on the firm you're going after. I think of firms in maybe three different buckets. There's the large blue chip investment firms where I feel like there should be a spot for almost every company somewhere in their portfolios, right? They have a number of PMs, the different funds that they're running across asset classes.
And I feel like there should be a spot for you. It's just finding the right analyst and the right spot for where your company fits. I mean, so with those firms, I'm a little bit less worried about fundamentals. I'm more concerned about finding the right person and the right analysts to speak with to get my foot in the door there.
You know, and there's kind of those midsize firms where I think the fundamentals are a little bit more important because they're maybe not running as many funds and they may have a more focused strategy and you need to be a little bit more diligent about whether your story fits within their strategy.
Are they really a growth or a value fund that you're targeting? And how do you fit there? And are you the right market cap for that specific fund? And so I'll look at some things like that. And then there's also the last bucket for me is really kind of industry specific investment firms, you know, so JLL is in the, in the real estate field. And there's firms who just invest in real estate, right? And there is where I'm probably the most focused on things like fundamentals, because probably where you're going to differentiate the most from your peers, and they're already going to be familiar with the industry and and a lot of the companies within that industry.
And so your fundamentals being a good match for what they're looking for is going to be more important in those types of situations.
Mark Fasken: Yeah, that makes sense. And you also, though, in in all of this, not to confuse things, but in all this you've also said It's important to not get too caught up in fit. What do you, what do you mean by that?
Scott Einberger: Yeah, I try to, that's a good question. I try to use fit as a way to rank order my list, but I don't want to get so caught up on whether an investment firm fits my particular company at the moment, because I found that, like we talked about earlier, sometimes you think an investment firm is a bad fit, and they really turn out to be interested.
Right? And and I've had the opposite happen where I think, oh, I should be a really good fit here. Right? But but they don't have an interest or, sometimes it's, it's staffing or they don't have an analyst covering your sector, your industry at the moment, they could have turnover and things like that impact it.
So I try not to worry too much about fit. I really want to reach out to firms and try to see who's interested and then start building relationships as I get responses.
Mark Fasken: Speaking of responses, that is one other question that I had for you because we actually get this question a fair bit which is, yeah what does the response rate look like to your emails, phone calls? Is it is it 1 in 10? Is it 2 in 10? Does it depend on the on the sort of channel that you're using helpful to to understand?
Scott Einberger: Yeah, I tend to use email at least as the initial way to reach out. I find that to be the least intrusive, and I get the highest response rate that way.
But yeah, it does vary a little bit. I'll just give you an example. We did an NDR in December in Boston, and I reached out to 9 firms on my target list there and I got a mixed response, as you would expect. I think I had four firms, four or five firms. I just got no response from. I had a couple of firms that I got a polite decline from.
And then I had three firms who accepted our meeting invite. So, you know, I say 3 out of 9, 3 out of 10 kind of seems like a good ballpark for me in terms of an acceptance rate, but it, it, it can vary a little bit. And I would say just be patient with it, right? I try to reach out at least three times to a firm before I kind of move them to the very bottom of my targeting list.
I don't like to drop anybody from my targeting list. I just. I want to keep them there because things change. People move around and but I may move them to the bottom if I've reached out a few times and I haven't got a response from them.
Mark Fasken: On that, and so a lot of it sounds like a lot of what you're doing those via email.
Is that correct?
Scott Einberger: Yeah, that's correct. I think that's the easiest way to do it. If you can just introduce yourself real quick. Occasionally, if I'm at a conference and so forth, and I, and I know a specific investment firm is at the conference, but they're maybe not on my particular meeting list.
I may try to, to find them or just introduce myself if I can during lunch or in the hallway or, or something like that to try to make an introduction. But but emails is seems to be the most effective way. I've done a few kind of cold calling where you just reach out. But that seems to be less effective to me.
And I think people appreciate the email and the opportunity to respond on their own time.
Mark Fasken: How much do you customize some of those emails? Are they vastly different depending on the investor or are they, you sort of have a template that you use and maybe you put a little bit of customization around it just depending on maybe the firm that they're at or people have talked about their education.
You were, they went to school, things like that, a football team that they follow something along those lines.
Scott Einberger: I haven't got quite that personal in some of my emails, but that's not a bad idea. Maybe I should evolve my strategy a little. The usually all I'm trying to do is just introduce myself and the company.
And so mine tend to be pretty short. I found that if you have a really long intro email, people probably aren't reading it. So I just want to get my, my company name in front of them, introduce myself, give them my contact information. And maybe just give them a couple sentences about the company and where we're going and and why I think we're a good opportunity.
But but usually I'm, I'm trying to keep it pretty short and in my template varies a little bit I would say, depending on who I'm reaching out to. And if I know they're familiar with the industry, I might give a little bit less background there. And focus more on just the firm itself or my company. And if they, if there's somebody who I know probably isn't heavily invested in my industry, then I might spend just a few minutes with a, with a industry background or a couple sentences on that. But usually no more than a paragraph you know, like four or five sentences in an email.
Mark Fasken: You mentioned just a minute ago an NDR that you were going on and you were doing a bit of outreach. Was that an NDR that you were setting up yourself? Or was that being set up by one of your banking partners?
Scott Einberger: That one I did on our own. So I, I self organized the NDR we did in Boston and reached out to some firms.
We had a nice mix of some of our current shareholders who we met with. And then the 3 targets who I mentioned.
Mark Fasken: And so in the case where you are working with the sell side, are you supplying them with names? That you'd like to meet with and are you also doing outreach yourself, even if it's being led by by the sell side?
Scott Einberger: That's a good question. So I will, if I'm doing an NDR with the sell side, I will send them a list of target firms that I have in that specific city or geography. I found that they're more than willing to sell side's more than willing to reach out and to those firms. But my hit rate is, it's usually lower than if I'm self organizing and NDR.
That's just my experience. Usually, if I'm doing an NDR with. With the sell-side, I won't reach out or try to self organize meetings myself. I just feel like it overlaps with their ability to schedule and and kind of set the meeting schedule. So typically, I won't try to do that. I'll try to do self organized on separate days.
Then I would do an event with the sell-side.
Mark Fasken: So I have just two more questions that I wanted to cover with you. One is I think an obvious one, but which is, I mean, with this year's last year's, I guess, macro economic backdrop and volatility and everything that's happening in the market.
Have your targeting efforts or your approach, has your approach to targeting changed? Are you doing more or less the same?
Scott Einberger: Yeah, I'd say my approach to compiling and putting together the targeting list hasn't changed. That I like to kind of... Keep pretty consistent. The outreach that we're doing has certainly changed.
I'm trying to be more proactive, especially around earnings calls, where I'll reach out to firms and try to set up follow up calls and and ask for them that they'd like to have a follow up call ahead of time. That's a best practice that I try to do anyway, but we're going farther down our list and
then we were in the past and and I'm also trying to spend more time with current shareholders right now. I found that, when, when things aren't going as well, or when the economy softer, they have more questions. They're getting more questions from their PMs. And so they need a little more frequent of a touch point.
And so we try to accommodate that. I'm also trying to do a more conferences and NDRs as our schedule allows to try to be out in front of investors and make sure they're familiar with what's happening across the industry. And, and, and with, and with my own company, but, a lot of, a lot of things are industry driven right now from an economic perspective.
And so we're trying to keep people up to date on that.
Mark Fasken: It's there seems to be a bit of a bit of a different view depending on different IROs or different companies that we speak to. Some people say, you know, there's. There's no good news. And so I don't want to go and talk to investors.
And there's other that say exactly what you said, which is it's probably more important that you're speaking to investors right now because they probably have a lot of questions and some of them probably aren't reaching out to you to ask them. And so I think it's, it's good to take that proactive approach.
Scott Einberger: Radio silence is is a red flag for the investment community. If you're not saying something, then they create their own narrative or their own story. And sometimes those assumptions that they're making aren't accurate or really what you want to be out there in the, in the investment community.
So I try to control that a little bit more than than maybe some others.
Mark Fasken: That's a great point. So my last question is around ESG specific targeting seems to be a growing topic of people doing ESG focused roadshows and things like that. Are you doing ESG specific targeting?
Scott Einberger: Not a lot to be honest with you, Mark, it's, it's been a challenge for me in the past.
I think there's some opportunity there. I feel like the ESG landscape is evolving so quickly right now and the way that investment firms look at ESG varies significantly and, some are very sustainability or environmentally focused. Some may be DEI focused, others may be governance focused or have other social platforms that they're really focused on.
And I feel like it's, it's hard to know or to, to hit on the key points with a lot of those investment firms that have a wide variety of, of metrics they're tracking right now. So this isn't to say that ESG targeting is, is bad, but it's, I've just had less success with it. And then I have just with kind of the normal targeting process.
I do think there's some opportunity if you're in Europe or London, there's some good, really ESG focused firms there that. That would be good to have meetings with. I have not done a specific ESG focused NDR or so forth. I'll try to mix in those firms along with my regular NDR schedule. So that we're, we're touching on those firms and getting our story out there from an ESG perspective.
But I haven't done a solely focused 1 at this point.
Mark Fasken: Got it. Okay, great. Well, I think that that. Covers all of our questions , but Scott, I really appreciate the time. I think I just love your practical hands on approach to investor relations and your approach to targeting.
I think it's, it's great. So thank you so much for the time and hopefully we'll be able to do this again.
Scott Einberger: Yeah. Thanks Mark. I really appreciate it. It was nice to be here.
