Investor Relations Communications Plan

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Investor Relations Communications Plan

EXECUTIVE SUMMARY

 

1.      Goals:

o Attract longer-term investors

o Stabilize investor base

o Build value for shareholders

 

2.      Target highest potential institutional investors for one-on-one marketing:

o Concentrate on small- to mid-cap value oriented portfolios

o Highly selective approach

o Requires management accessibility

  

3.      Market aggressively to individual investors:

o Market through BetterInvesting (also known as the National Association of Investors Corp.)

o Capitalize on consumer appeal and familiarity

4.      Increase analyst coverage:

o Target brokerage houses with strong institutional sales

o Address regional brokerages first to build credibility

 

5.      Program:

o Initial program runs nine months

o Initial program cost: [Insert estimate]

 

 

Investor Relations Communications Plan

 

1.      Goals

o Attract long-term investors

o Stabilize investor base (reduce volatility)

o Build value for shareholders

 

2.      Observations and Situation Analysis

Volatility deters value-oriented investors whose longer-term orientation tends to stabilize trading and support sustained price appreciation.

 

Telecom stocks in general exhibit higher than average volatility; XYZ Corp.’s volatility is in the mid range for telecom peers (Table 1)

 

XYZ Corp. tends to have a higher percentage of short sellers and lower percentage of institutional ownership than peer companies (Table 2)

 

Among peer companies reviewed, XYZ Corp. is among those with the highest percentage of low and moderate turnover institutional investment and the lowest percentage of high turnover (Table 3)

 

Although institutional interest is constrained by difficulty in taking large positions, there is potential institutional interest in XYZ Corp.:

 

• 76 institutional portfolios with low to moderate turnover, Value, GARP or Specialty investment styles, and positions in 2 or more lower-cap peers, but not XYZ Corp. (Table 4, institutional investment style definitions in Appendix 3)

  

• 50 mutual funds with low to moderate turnover, Value, GARP or Specialty investment styles, and positions in 2 or more lower-cap peers, but not XYZ Corp. (Table 5, institutional investment style definitions in Appendix 3)

 

Low level of institutional holdings, partially due to high percentage of inside holdings

 

Small-cap funds most likely receptive to stocks with limited float

 

Potentially strong consumer franchise favors addressing retail market, but not all participants in retail market are suitable targets; media hype creating lottery mentality

 

 

BetterInvesting offers opportunity to reach stable individual market, but approach favors dividend reinvestment

  

XYZ Corp. has only one analyst with coverage (Table 6)

 

Increased analyst coverage tends to increase P/E as well as build reservoir of potential investors

  

3.      Messages

o XYZ Corp. has turned the corner

- Eliminated under performing operations

- Gross margin improving

- Balance sheet is sound

o Value-building strategy

- Capitalize on global presence

- Emphasize gross margin rather than revenue growth

- Branded services

- Accessories

  

4.      Strategy

o Encourage long positions

▪ Target institutions which hold peer companies but not XYZ Corp., select small cap funds and others

▪ Address individual Investors through Corporate website and BetterInvesting

o Increase analyst coverage

o Strengthen Market Maker relationships

o Counter short interest by building shareholder loyalty as well as value

 

5.      Tactics

  A - To encourage long positions

 

(1) Institutional Investors

a - Identify holders of peers but not XYZ Corp.

 

b - Identify high potential small cap funds

 

c - Mail and personal contact campaign

Meetings with fund managers (groups or one-on-one) in key cities in region, then around U.S. -- three or four days per month

 

Direct mail to top prospects and holders of large positions (see Appendix 1)

 

d - Conference participation

 

Institutionally sponsored

 

Commercially sponsored

 

e - Work with Marketing establish industry leadership image

 

Press articles/interviews

 

Expert spokespersons

 

Reprints of articles by/about XYZ Corp.

 

f - Message articulation

 

Short (20 minute) and long (40 minute) format standard chart presentations for use at conferences and key city meetings

 

(2) Individual Investors

a - Use IR web page to promote value of XYZ Corp. investment by demonstrating a strong commitment to shareholders

 

- IR Mission statement

Treat shareholders as partners

Open communication

 

- Comments from management

Strategy

Milestones

 

- Conference information (date, time, call-in number)

 

- Quarterly results release dates

 

- Industry trends

 

- Technology updates

 

- Any other useful, interesting, non-material information

 

b - Link to BetterInvesting from corporate IR page

 

c - Emphasize home state (or region) BetterInvesting Chapters

Participate in Investor Fairs

  Visit a meeting of each club

Letter and phone contact to follow-up

 

d - Extra level of service in lieu of dividend (e.g., conference

call for individual investors to meet with management)

 

e - Plain English quarterly reports to shareholders in summary form. Post on web page, email and fax. Include instructions on accessing 10-Q either on web or requesting hard copy.

 

  B - Increase analyst coverage

1) Target regional brokerages with strong institutional sales

(Appendix 2) as well as national firms

 

(2) Add to news release and conference call fax lists

 

(3) Phone and direct mail to establish contact

 

(4) Meetings with management

 

(5) Analyst Day - presentations and tours

 

 C – Strengthen market maker relationships

 (1)   Address top five (over 50% of trading activity)

 

(2)   NASDAQ can assist with introductory meetings

 

(3)   Add to news release and conference call fax lists

 

(4)   Phone and direct mail follow-up

 

(5)   Meetings with management

 

D - To counter short interest -- build shareholder confidence and loyalty

1. Use IR website to promote value of XYZ Corp. investment by demonstrating a strong commitment to shareholders

a - IR Mission statement

Treat shareholders as partners

Open communication

 

b - Comments from management

Strategy

Milestones

 

c - Conference information (date, time, call-in number)

 

d - Quarterly results release dates

 

e - Industry trends

 

f - Technology updates

 

g - Any other useful, interesting, non-material information

2. Offer all investors (including individuals) opportunity to listen to conference calls, ask questions and receive copies of all news releases

 

3. Plain English quarterly reports to shareholders in summary form. Post on website, email and fax. Include instructions on accessing 10-Q either online or requesting hard copy.

 

6. Measurement

7. Changes in ownership and analyst coverage are indicators most closely linked to Investor Relations communications

8. Implementation

9. Budget

 

Program Elements…………………….$162,000 (see Table 8 for a program budget)

Technical Resources…………………. 32,000

$194,000

 

Table 1

Volatility: XYZ vs. Peers

|Beta Coefficient |

|ABCD |0.47 |

|EFGH |0.56 |

|IJKL |0.62 |

|MNOP |1.19 |

|QRST |1.21 |

|UVWX |1.27 |

|XYZC |1.31 |

|DCBA |1.39 |

|HGFE |1.43 |

|LKJI |1.49 |

|PONM |2.01 |

|TSRQ |2.07 |

|XWVU |2.86 |

Source: I/B/E/S

  Table 2

Ownership Profiles

|Peer Co. |Shares Out |# of inst. |Inst. |

|Ticker | | |% of Ttl |

|  | | | |

|QRST |40 |37 |23 |

|ABCD |36 |40 |24 |

|UVWX |36 |39 |25 |

|XYZC |41 |33 |26 |

|MNOP |33 |40 |27 |

|IJKL |30 |40 |30 |

|LKJI |31 |39 |30 |

|TSRQ |36 |34 |30 |

|DCBA |31 |37 |32 |

|XWVU |28 |37 |35 |

|EFGH |36 |28 |26 |

|HGFE |26 |37 |37 |

|PONM |27 |36 |37 |

Source: NASDAQ Online

Table 4

Selected Institutional Targets (Positions in two or more small to mid cap XYZC peers)

|Name |Turnover |Style |Type of Company |

|Franklin Advisers, Inc. |M |Income Value |Banks & Trusts |

|Merrill Lynch & Company Inc. |M |Specialty |Research Firms |

|Mellon Equity Associates, LLP |M |Core Value |Investment Advisors |

|Franklin Portfolio Associates L.L.C. |M |Deep Value |Investment Advisors |

|Renaissance Technologies Corp. |L |Specialty |Hedge Funds |

|Delphi Management, Inc. |L |Deep Value |Investment Advisors |

|Pinnacle Associates Limited |M |GARP |Investment Advisors |

|Anchor Capital Advisors, Inc. |M |Deep Value |Investment Advisors |

|Goldman Sachs & Company |M |Specialty |Research Firms |

|AAL Capital Management Corporation |M |GARP |Investment Advisors |

|First Manhattan Capital Management |L |GARP |Investment Advisors |

|WM Advisors Inc. |M |GARP |Investment Advisors |

|Lord, Abbett & Co. |M |Income Value |Investment Advisors |

|Wallace R. Weitz & Company |M |GARP |Investment Advisors |

|Morgan Stanley Dean Witter Invt. Mgmt. (MAS) |M |GARP |Investment Advisors |

|Dreyfus Corporation |M |GARP |Investment Advisors |

|Evergreen Institutional Asset Management |L |Core Value |Banks & Trusts |

|Smith Barney Asset Management |L |GARP |Investment Advisors |

|Virginia Investment Counselors |L |Core Value |Investment Advisors |

|Morgan Stanley Dean Witter Invt. Mgmt. |M |GARP |Investment Advisors |

|U.S. Bancorp Piper Jaffray Asset Mgmt. (MN) |M |Core Value |Banks & Trusts |

|Zurich Scudder Investments, Inc. |M |Core Value |Investment Advisors |

|T. Rowe Price Associates, Inc. |M |GARP |Investment Advisors |

|Heartland Advisors, Inc. |M |Deep Value |Investment Advisors |

|Merrill Lynch Investment Managers (NJ) |M |Deep Value |Investment Advisors |

|Raymond James & Associates, Inc. |M |Specialty |Investment Advisors |

|Fidelity Management & Research |M |GARP |Investment Advisors |

|Teacher Retirement System of Texas |L |GARP |Pension Funds |

|Texas Employees' Retirement System |M |Core Value |Pension Funds |

|Bank of Oklahoma |M |Income Value |Banks & Trusts |

|First National Bank of Southwest Ohio |L |Core Value |Banks & Trusts |

|Lyon Street Asset Management Company |L |Income Value |Banks & Trusts |

|Kahn Brothers & Company Inc. |L |Deep Value |Investment Advisors |

|Federated Investors, Inc. |M |Core Value |Investment Advisors |

|Dean Investment Associates |M |Core Value |Investment Advisors |

|Banc of America Capital Management, Inc. |M |Core Value |Banks & Trusts |

|Morgan Guaranty Trust Corp. |M |Core Value |Banks & Trusts |

|Ragen MacKenzie Inc. |M |Specialty |Research Firms |

|Fleet Investment Advisors, Inc. |L |GARP |Banks & Trusts |

|Banc One Investment Advisors Corporation |M |Core Value |Banks & Trusts |

|Manchester Capital Corporation |L |Core Value |Investment Advisors |

|Sandler Capital Management |M |Specialty |Investment Advisors |

|Ohio Public Employees' Retirement System |L |GARP |Pension Funds |

|Ayco Company |M |GARP |Investment Advisors |

|Lazard Asset Management Ltd. |M |Core Value |Investment Advisors |

|Roll & Ross Asset Management |M |Core Value |Investment Advisors |

|Associated Bank N.A. |M |GARP |Banks & Trusts |

|Victory Gradison Capital Management |M |GARP |Investment Advisors |

|Ohio State Teachers' Retirement System |L |Core Value |Pension Funds |

|Gofen & Glossberg, L.L.C. |L |Core Growth |Investment Advisors |

|Prudential Securities, Inc. |M |Specialty |Research Firms |

|Northern Trust Company of Connecticut |M |GARP |Investment Advisors |

|Parametric Portfolio Associates, Inc. |M |Deep Value |Investment Advisors |

|Royce & Associates, Inc. |M |Deep Value |Investment Advisors |

|U.S. Trust Corporation |L |Core Value |Banks & Trusts |

|Qwest Management |L |Core Value |Pension Funds |

|Wesbanco Bank Wheeling |M |Core Value |Banks & Trusts |

|BNY Asset Management |L |Income Value |Banks & Trusts |

|Shufro, Rose & Co. LLC |M |Deep Value |Investment Advisors |

|Citizens Investment Services |L |Core Value |Banks & Trusts |

|Legg Mason Wood Walker, Inc. |M |Specialty |Research Firms |

|Morgan Stanley Dean Witter Advisors, Inc. |M |Core Value |Investment Advisors |

|RBC Dain Rauscher Wessels |M |Specialty |Research Firms |

|Capstone Asset Management Company |L |Core Value |Investment Advisors |

|National City Corporation |L |Core Value |Banks & Trusts |

|Deere & Co. |M |GARP |Pension Funds |

|Travelers Investment Management Co. (TIMCO) |M |Core Value |Investment Advisors |

|Advest Group |M |Specialty |Research Firms |

|Manufacturers Advisers Corporation (Toronto) |M |GARP |Insurance Co.s |

|CIBC World Markets Corp. |M |Specialty |Research Firms |

|J.P. Morgan Private Bank |M |Core Value |Banks & Trusts |

|Hilliard Lyons Investment Management |L |Core Value |Investment Advisors |

|HSBC Asset Management |M |Core Value |Banks & Trusts |

|Firstar Bank N.A. |M |Core Value |Banks & Trusts |

|Wells Fargo Bank, Iowa N.A |L |Core Value |Banks & Trusts |

|AIB Investment Managers Ltd. (Dublin) |M |GARP |Investment Advisors |

Source: NASDAQ

 

Table 5

Selected Mutual Fund Targets (Positions in two or more small- to mid-cap XYZ peers)

|Name |Turnover |Style |

|GCG Trust - Capital Growth Series |M |GARP |

|UBS (Lux) Equity Fund – Technology |M |Specialty |

|Franklin Global Communications Fund |M |Specialty |

|Gabelli Global Telecommunications Fund |L |Specialty |

|INVESCO Telecommunications Fund |M |Specialty |

|Franklin Templeton VIP Franklin Global Comm. Secs. |M |Specialty |

|Vanguard Windsor II Fund (Dallas) |L |Income Value |

|Weitz Partners Value Fund |M |GARP |

|Heartland Value Fund |L |GARP |

|WM Mid Cap Stock Fund |L |N/A |

|Prudential Small Company Fund, Inc. |M |Core Value |

|Wasatch Small Cap Growth Fund |L |GARP |

|Van Kampen American Value Fund |M |Income Value |

|Fidelity Select Wireless Portfolio |L |Specialty |

|iShares Dow Jones US Telecom Sector Index Fund |M |Specialty |

|Weitz Value Fund |M |GARP |

|Kent Small Company Growth Fund |L |GARP |

|Putnam Utilities Growth & Income Fund |M |Specialty |

|Gabelli Small Cap Growth Fund |L |GARP |

|AIM Global Telecommunications Class |M |Specialty |

|DFA U.S. 6-10 Small Company Series |L |Index |

|StrategicNova U.S. Midcap Value Fund |M |GARP |

|Kemper Small Cap Value Fund |L |GARP |

|Kobren Delphi Value Fund |M | Core Value |

|Gabelli Global Multimedia Trust Inc. |L |Specialty |

|Scudder Small Company Value Fund |M |Deep Value |

|Northern Global Communications Fund |M |  |

|Gabelli Asset Fund |L | Core Value |

|Protective CORE U.S. Equity Fund |M |Deep Value |

|Goldman Sachs Funds US CORE Equity Portfolio |M |Specialty |

|TIFF U.S. Equity Fund |M |Deep Value |

|Gabelli Equity Trust, Inc. |L | Core Value |

|Evergreen Utility and Telecommunications Fund |L |Specialty |

|Advance Capital I Equity Growth Fund |L |GARP |

|Gabelli Global Opportunity Fund |M |N/A |

|Undiscovered Managers Behavioral Value Fund |M |Deep Value |

|USAA Small Cap Stock Fund |M |  |

|Legg Mason U.S. Small-Capitalization Value Trust |M |Deep Value |

|Vanguard Tax-Managed Small-Cap Fund |M |GARP |

|Target Portfolio Trust-Small Capitalization Value |M |Core Value |

|Delaware Pooled Small-Cap Growth Equity Portfolio |M |  |

|Elliott & Page American Growth Fund |M |GARP |

|Guardian Investor-Gabelli Capital Asset Fund |M |GARP |

|JPVF Small Company Portfolio |M |GARP |

|Chase Vista Capital Advantage - Capital Growth |M |GARP |

|Scudder Variable - Scudder Small Cap Value Port. |M |GARP |

|JP Morgan Investment - JPM USD Global Balanced |M |Core Value |

|CG Capital Markets Fund Small Cap Value Equity |M |Deep Value |

|T. Rowe Price Total Equity Market Index Fund |L |GARP |

|Advance Capital I Balanced Fund |L |Core Value |

Source: NASDAQ 

Table 6

Analyst Recommendations

|  |Strong |  |  |Total |  |

|Peer Company (Ticker) |Buy (1) |Buy (2) |Neutral (3) |Recommendations |Consensus |

|XWVU |5 |2 |  |7 |1.3 |

|DCBA |16 |9 |2 |27 |1.5 |

|EFGH |12 |3 |3 |18 |1.5 |

|LKJI |8 |10 |2 |20 |1.7 |

|PONM |8 |10 |3 |21 |1.8 |

|HGFE |5 |10 |3 |18 |1.9 |

|MNOP |8 |13 |5 |26 |2.0 |

|IJKL |2 |5 |3 |10 |2.1 |

|TSRQ |  |3 |2 |5 |2.4 |

|ABCD |1 |8 |11 |20 |2.5 |

|UVWX |2 |11 |10 |23 |2.5 |

|XYZC |  | |

|Knight Securities |15.8% |17,726,588 |

|Schwab Capital Markets |11.0% |12,344,113 |

|Herzog, Heine, Geduld |8.9% |9,956,671 |

|Legg Mason Wood Walker |7.1% |7,988,534 |

|Susquehanna Capital Group |6.5% |7,272,433 |

|McDonald & Co. Sec. Inc. |5.1% |5,685,036 |

|Island System Corporation |5.0% |5,600,771 |

|Raymond James & Associates |4.1% |4,637,603 |

|Sherwood Securities Corp. |3.3%% |3,727,791 |

|Tucker Anthony Incorporated |3.2% |3,614,863 |

|Spear, Leeds & Kellogg |2.8% |3,158,224 |

|Merrill Lynch |2.2% |2,459,886 |

|B-Trade Service LLC |1.8 |1,992,040 |

|Jefferies & Company |1.7% |1,947,648 |

|Cantor, Fitzgerald & Co. |1.7% |1,896,202 |

|REDIBook ECN LLC |1.6% |1,786,262 |

|Midwest Stock Exchange |1.3% |1,472,055 |

|ABN AMRO Securities (USA) |1.2% |1,339,109 |

|Bank of America Securities |1.1% |1,237,399 |

|The Brass Utility |1.0% |1,143,958 |

|First Union Securities |1.0% |1,086,171 |

|Southwest Securities Inc. |0.9% |1,012,312 |

|Fidelity Capital Markets |0.9% |962,173 |

|ING Barings Furman Selz, LLC |0.9% |961,323 |

|Sanders Morris Harris Inc. |0.8% |918,219 |

|Salomon Smith Barney |0.7% |758,603 |

|Millennium Securities Corp. |0.7% |753,143 |

|Arichipelego |0.6% |697,783 |

|Ladenburg, Thalmann & Co. |0.6% |650,634 |

|25 MisTSRQaneous Market Makers |2.7% |2,986,500 |

|Non-registered Market Makers |4.1% |4,566,789 |

|Total |100% |112,340,836 |

Source: NASDAQ Italic = ECN

Table 8

Strategy/Tactics Budget

|Strategy: |Encourage Long Positions |Increase |Market Maker |Counter |  |

|Tactics: | |Coverage |Relationships |Short Interest |Budget |

| | Institutions Individuals | | | | |

Targeting study & analysis |1 |  |  |  |  |$20,000 | |Web Page |1 |1 |2 |2 |1 |5,000 | |Mission Statement |1 |1 |  |  |1 |  | |Conference Calls |1 |1 |1 |2 |1 |3,000 | |Webcast conference calls |1 |1 |1 |1 |1 |4,000 | |Expanded Fax Distribution |  |1 |1 |1 |1 | 500 | |Management Presentations |1 | |1 |  |2 | 2,000 | |Regional Meetings |1 |  |2 |2 |2 |36,000 | |Sponsored Conferences |1 |  |2 |  |2 |20,000 | |Spokesmanship/Interviews |1 |1 |2 |  |2 | | |Article reprints |1 |  |1 |  |  |7,000 | |NAIC Membership |  |1 |  |  |  |1,000 | |NAIC chapters (Texas) |  |1 |  |  |  |7,000 | |Greensheet |  |1 |  |  |  |4,500 | |Annual Conference |  |1 |  |  |  |15,000 | |Phone and Direct mail |  |  |1 |1 |  |10,000 | |Fax/Conference Call follow-up |  |  |1 |1 |  |  | |Analyst visits |  |  |1 |1 |  |7,000 | |Analyst Day |  |  |  |  |  |20,000 | |  |  |  |  |  |  |$162,000 | |1 = primary |  |  |  |  |  |  | |2 = secondary |  |  |  |  |  |  | | 

Appendix 1 – Direct Mail to Institutions & Mutual Funds

 

Monthly mailings to include:

 

1. Letters from XYZ Corp. Management:

CEO – Growth strategy and outlook

COO – Overview of operations

CFO – Financial performance and key metrics

Regional Management – Region overviews

 

2.      Article reprints, news releases with cover letter

 

3. Non-material background data (e.g., product mix by technology) with cover letter

 

4.      Product sample with cover letter on marketing strategy

 

5. Marketing CD (or USB flash drive) and cover letter on value-added services

 

6. Order flow schematic to illustrate unique service capabilities with cover letter on XYZ Corp. capabilities

 

7. Occasional mailing of promotional product with XYZ Corp. logo imprint

 

 

Appendix 2 – Targeted Analysts

 

Regional:

 

Regional Firm A, Analyst Name

 

Regional Firm B, Analyst Name

 

Regional Firm C, Analyst Name

 

Regional Firm D, Analyst Name

 

Regional Firm E, Analyst Name

 

Regional Firm F, Analyst Name

 

 

National:

 

National Firm A, Analyst Name

 

National Firm B, Analyst Name

 

National Firm C, Analyst Name

 

National Firm D, Analyst Name

 

 

 

 

Appendix 3 – Investment Style Definitions

 

In Nasdaq Online, there are 13 possible styles, defined below, by which institutional investors are classified by the source of the data, the Carson Group. The Carson Group employs quantitative techniques based on key financial fundamentals of an investor's portfolio: primarily, the portions of the portfolio above the weighted average of the S&P 500 for price-to-earnings ratio, dividend yield, price-to-book ratio, and five year estimated earnings per share (EPS) growth.

 

An institution must generally meet all the criteria for a given style. In some cases, however, the securities that an investor is buying and/or selling currently provide a better indication of the true investment style being employed. If a portfolio is not available for a given investor, the Carson Group applies its unique knowledge of the investor's behavior to accurately classify its dominant style. For "Global" investors, a specific style has been given which is based on a review of the North American securities held in the portfolio.

 

The 13 possible investment styles are as are as follows:

 

Aggressive Growth -- Aggressive growth investors employ an extreme version of the growth style. Their aggressiveness may be defined primarily by holding stocks in companies that are either growing extremely quickly, are in an early stage of their life cycle, and/or have minimal or no current earnings. In general, Aggressive Growth investors have higher portfolio turnover than most investors, as their style requires them to react quickly as new information becomes available that is either positive or negative concerning growth rates.

 

Core Growth -- As the name suggests, these managers invest in large, blue chip companies that have historically performed at or near the top of the S&P 500 in terms of earnings and revenue growth. As a result, Core Growth investors are often willing to pay up for these blue chip companies, purchasing issues that trade at higher price-to-earnings and price-to-book multiples. As an example, companies in the Pharmaceutical and Consumer Product industries often are heavily weighted in Core Growth investor's portfolios. Core growth investors usually have a long term investment horizon, as they employ a buy and hold strategy.

 

Core Value -- Investors with this investing style focus on buying securities at relatively low valuations on an absolute basis or in relation to the market or historical levels. Value portfolios typically exhibit below-average price-to-earnings, price-to-book and price-to-cash flow multiples. In addition, growth and profitability characteristics are frequently below market averages, but with an expectation for improved future performance. Core Value investors typically invest in industries such as Energy and Financials, which trade at discounts to the general market, but perform consistently over the long term. This style is similar to Core Growth, as Core Value investors also try to employ a buy and hold strategy--holding issues until their valuations start to approach or exceed market multiples.

 

Deep Value -- This style is a more extreme version of value investing that is characterized by holding the stocks of companies with extremely low valuation measures. Often these companies are particularly out-of-favor or in industries that are out-of-favor. Some investors in this category

are known for agitating for changes such as new management, the sale of assets or a spin-off. This group of investors is sometimes categorized as "contrarian," as they usually invest in companies whose prospects are regarded as negative by the rest of the market.

 

Emerging Markets -- This style refers to those money managers investing the majority of their equity assets in stocks of companies domiciled outside of North America. In most cases, the North American portion of the portfolio is either too small or does not exist, precluding The Carson Group from determining an accurate investment style based on the fundamentals of these companies. For "Global" investors which have more significant North American holdings, a specific style may be given which will apply primarily to the North American portion of the portfolio.

 

Growth at a Reasonable Price (GARP) -- As the name suggests, GARP investors try to build their portfolios with securities that are trading at a discount to the market, but are expected to grow at higher rate than the market average. This is a more conservative investment style in comparison to an outright growth-oriented strategy. In addition, dividend yield is generally not a concern of GARP investors.

 

Growth -- Growth investors bridge the gap between the Aggressive Growth and Core Growth investment styles. They tend to be slightly more aggressive than Core Growth investors, willing to pay slightly higher multiples for stocks and trade at a more active pace. In general, they are looking for companies growing at superior rates than the general marketplace, but are unwilling to pay for extremely high multiples.

 

Income Value -- These investors are similar to those employing the Core Value style except that they place an emphasis on buying issues with higher than average dividend yields.

 

Index -- These investors generally create portfolios which are designed to match the composition of a broad-based index such as the S&P 500, the Wilshire Small Cap, and the Russell 3000. Therefore, the performance and risk of the portfolio mirrors the general market. Their investment decisions are driven by indices, not by an evaluation of the companies or their securities. The Carson Group categorizes these funds based on the firm's historical investment behavior.

 

International & Emerging Markets -- These investors focus the majority of their investments outside of North America, particularly Western Europe and Japan.

 

Momentum -- These institutions invest in stocks when their earnings, earnings estimates, or prices are advancing at a faster rate than the market or other stocks in the same sector. Momentum investors generally look for stocks experiencing upward earnings revisions or are producing positive earnings surprises. Most of the investors in this category have very high portfolio turnover rates due to a short-term focus, and therefore will liquidate positions at the slightest hint of a disappointment or deceleration. The Carson Group categorizes these funds based on the firm's historical investment behavior.

 

Specialty -- Specialty investors tend to have a narrowly-defined investment universe, in that they have pre-determined biases towards certain companies, industries or sectors, regardless of their financial characteristics. Examples include investors that specialize in specific industries or hold a particularly high concentration of a single stock or a very small set of stocks, or specialize in convertible securities. The Carson Group categorizes these funds based on the firm's historical investment behavior.

 

Yield -- Yield investors focus on companies with yields that are well above-average and on their ability to continue making or increasing dividend payments. Investors that fall into this category tend to focus on income and safety more than on capital appreciation.

 

Beta (Nasdaq definition): A statistical measure of a stock’s volatility compared with the overall market. A beta of less than 1 indicates lower risk than the market; a beta of more than 1 indicates higher risk than the market.

 

Beta (I/B/E/S definition): A measure of the sensitivity of a stock’s price to the movement of an index (S&P 500). In I/B/E/S, the Beta factor is the slope of a straight line fitted to 156 observations of weekly relative price changes. These observations are equal to the ratio of the weekly percent price change in a particular stock to the weekly percent change of the S&P 500.

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