Corporate Forum Blog

Retail Investors You're the Egg McMuffin

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Have you seen the new McDonald’s commercial?  It rocks.  People use “Egg McMuffin” to express the best of the best.  The girlfriend tells her guy he’s an Egg McMuffin.  The real estate agent promises the apartment hunter he’ll love the unit because it’s a real Egg McMuffin.  And I’d like to bestow Egg McMuffin status on retail investors.

According to a study titled “The Importance of Courting the Individual Investor,” retail investors offer a full menu of benefits including: 

• Individuals are more consistent, long-term holders of stock
• Individuals bring a needed element of stability to the corporation
• As women investors, who tend to be more conservative, increase in numbers, they contribute to even more stability
• Companies are increasingly wary of the unchecked clout of big institutional buyers
• Individuals are more patient investors; less likely to be swayed by short-term market movements
• With the rise in defined contribution plans, individuals have more control and latitude in making investment decisions

For publicly traded companies this means there is an opportunity to consider an ideal mix of shareholders – retail investors vs. institutional investors.  And then determine how best to accomplish that mix.

Step number one is to consider the story through the eyes of a retail audience.  For utilities, consumer product and retail firms in particular, the retail audience is an easy fit.  For other companies it is simply a question of ensuring the investor presentastions conveys the value proposition of the company to a retail audience.

Step number two is to determine an outreach strategy – typically some mix of on-line and in-person introductions.

Last, and certainly not least, continue to cultivate additional stock investments and company loyalty from this "grade A" audience.