Contributed Commentaries
Investing in precious metals: perspective from an investor relations professional
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
By introduction, I am a marketer and communications strategist, but my emphasis is investor relations (IR) for precious metals and industrial companies. The first question should be, what is IR to the retail investor?
IR is a combination of public relations, financial communications and shareholder engagement. IR Officers (IRO) usually come from one of two backgrounds: Either the communications, PR side (Where I come from), or the financial and accounting side. Many IROs are on their way to becoming a CFO or even a CEO so they pick up different skills along the way, which provides the different emphasis in their work.
Every IRO approaches the position differently, so it helps to understand the viewpoint of the IRO when you contact them for information about the company you are investing in.
All IR departments should be focused on big and small shareholders alike and provide answers, clarification and material information to shareholders, analysts and prospective shareholders. But don't overstay the welcome, that is you can ask for too much of the IRO's time as well. Ultimately, a good IRO is trying to balance a thousand demands an hour from executives, shareholders, analysts and other stakeholders.
As an investor, how do you use the IROs to your advantage? Reach out to companies that you own shares in and get on their email list. Let the IRO know that you are a shareholder and what specific things are important to you. Follow the company on social media and follow the IRO's professional accounts.
Create Google Alerts to follow specific companies in the news as well as sectors. As an example, let's say you are investing in XYZ Resources with gold mines in Nevada and Mexico. You'll want to create Google Alerts for "XYZ Resources," "gold mining Nevada," and "gold mining Mexico."
The following list of key indicators are from questions that I received from individual investors during my two tenures as company IRO (now, as a consultant, I don't usually receive inbound questions from shareholders).
- Does the CEO own shares in the company? I received this question quite a bit and it shows me that shareholders are doing their research. How big a position does the CEO own? Is he/she "all in?" This is a great indicator to how committed the CEO is to the long-term growth of a company.
- ESG activities are Environment, Social and Governance. How does the company conduct itself in these areas? This area has gained prominence in the past few years as companies are more mindful of how ESG activities are perceived by shareholders and the impact to the communities they operate within.
- How is the company/mine perceived in the surrounding communities? Having worked for a company with mines in Latin America, this is a huge factor when looking at a company's social responsibility activities. But be careful of where your information comes from. There are lots of anti-mining organizations that put out false news so keep your eyes wide open.
- Does the company's IRO respond to emails in a timely fashion? To me, this was always important and my team returned all calls and emails within 24 hours. But I know of some that take weeks as they just don't have the staff to get everything done. As a shareholder, you vote with your ownership, so this is another area to look at.
- Can you find news about the company? Some companies don't release much information. Their "news flow" is relegated to only what is required. Besides what you find here on Kitco, there are some great sources out there such as Prospector.com and The Gold Report. Develop your go-to sources for information about the companies you invest in.
- Does the company attend investment conferences? There are conferences for retail shareholders to attend in person, or virtually, to directly engage with the company for updates. One of my favorites is the New Orleans Investment Conference (usually in October). The folks at Jefferson Financial put on an outstanding event and you can immerse yourself in the business of managing your investments over the course of several days. Events like this provide you direct access to companies to receive direct and up to date information.
- Are newsletter writers engaging with the company? On the institutional side of investors, analysts keep their clients informed about a company through their reports. The reports provide overview and opinion about a mining company's progress to goals. But these reports are usually reserved for an institution's clients. On the retail side of the shareholder group, there are newsletter writers that one can subscribe to. These are experts in the field that provide analysis and commentary on companies to keep investors informed.
This is certainly not a complete checklist, but as an investor, you want to create your own list of key performance indicators that are important to you. When you become an active investor, you create an opportunity for your portfolio to be under your control, not just sitting under someone else's control.
Ira M. Gostin, MBA, APR is an investor relations, strategic marketing and communications consultant who helps companies of all sizes move the needle. He is the founder and chief strategist at G* Strategies LLC in Reno, Nev., and New York City. Ira was named the Most Influential Marketing Executive of the Year for Nevada in 2018 by Acquisition International magazine.
www.g8strategies.com
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