At Parmenion Group we take Investor Relations (IR) policy very serious. Not just for investors in the ‘parent’ entity (Parmenion Soparfi) or partners in our group companies (Parmenion Ethical, Nicanor and Evolve), but also for those investing in funds advised by us.
We believe that a good IR policy is most certainly not a financial PR policy, and the IR information we disseminate will be thorough, objective and transparent. Without ever hiding the not-so-positive feedback when a certain event or situation requires us to do so.
The value of shares in either a publicly-listed or private company is equal to the net present value of its future dividends. Investors will use a discount rate that is equal to the risk-free interest rate plus a risk premium. The risk premium will incorporate a so-called ‘estimation risk’ premium. Academic and professional studies since the 1980s have indicated that the true value of ‘good’ IR is the reduction of ‘estimation risk’.
Good, interactive IR policies will help us to reduce this risk. And companies practicing good IR will be rewarded through the accompanying reduction in the discount rate due to a now lower ‘estimation risk’ premium and – consequently – a higher valuation of its shares.
Financial PR or plain lying to investors might ‘work’ by misleading the stakeholders one time or in the short run, but they will automatically strike back through a long-term extra increase in the applied estimation risk premium. Result: in the long term the value of the company will be lower, thereby more than offsetting the short-term ‘gains’.
At Parmenion we firmly believe that this is not in the economic interest of the company and its valuation. But we do not only reject this ‘short-termism’ because of its longer term economic impact. We also cherish an ethical approach to business with our specialized affiliate Parmenion Ethical a clear token of this.
Modern IR: open, detailed and interactive
A good IR policy is interactive and it consists of more than some kind of formal dissemination of loads of details in a one-sided flow from company to investors and other interest parties. Our example in this respect is Berkshire Hathaway, Warren Buffett’s company. Buffett c.s. did actually not have a formalized IR policy like many others did. But IR scholars showed that the effectiveness of Berkshire’s policy came from the highest layers of management being directly involved in an interactive Q&A between them and (potential) investors and other stakeholders.
A one-sided policy would assume that corporate management or IR staff knows exactly what factors are at a specific moment in time important for (potential) investors as far as the calculation of estimation risk is concerned. Even in small companies like ours it is almost impossible to know exactly what worries investors and/or which part of corporate policy is less clear.
That is why Parmenion Group has created a modern, social media policy including sufficient possibilities to contact key staff directly. We believe that this will help us ensure that the questions we pose are exactly those for which (potential) investors want to hear the answers. And if not, we want to make sure that (potential) investors feel sufficiently part of our team, so that they will put those questions themselves on our agenda.
One important tool for executing this form of communication is our ‘Interactive Blog Challenge 2017 and beyond’ through which we will suggest topics to investors, other stakeholders and interested outsiders. Based on their feedback, our key staff will then address this topic in a blog entry. We believe that this approach will give us a lot of information about what is worrying financial market participants in general and our investors in particular. At the same time, we will provide our audience with interesting content on the very topic they voted for.
At Parmenion Group, Miss Fatima de Vos – a specialist in Online Media – leads our IR efforts as well as our social media policy in general.
Interested in knowing more about Parmenion Group, its group companies or our IR Policy? Feel free to contact Fatima de Vos at email@example.com . Miss De Vos has the full backing of group management and where needed your questions will be directly forwarded to the relevant senior executive.
Miss Fatima De Vos – Head of Investor Relation Policy
Fatima De Vos has 20 years of relevant experience in web-design, online media, corporate branding and social media partly within larger (IT) organizations but also as an independent entrepreneur. In October 2016 she became Parmenion Group’s first Head of Investor Relations Policy when we decided to formalize our activities in this field.
Taking into account Parmenion Group’s main themes (Sustainability, the New Finance and a Changing World), her expertise in (Fin)Tech and Investor Relations, and involvement in empowerment and gender diversity initiatives, her choice as first Chairman of Triple F – Parmenion Group’s charity – was not a big surprise.
She is also a director at MountainFox BV, a Netherlands-based content agency with main activities in the fields of quantitative financial trading (artificial intelligence for the creation of a robotrader tool) and online marketing and branding for innovative companies both within and outside the FinTech sector.