Institutional investment managers with over $100 million in 13(f) securities that use the US mail or other means of interstate commerce are required to report their holdings as of the last day of each calendar quarter on SEC form 13F. Filings are due 45 days following the last day of the calendar quarter. This filing is a requirement of the Securities Exchange Act of 1934 that is intended to increase investor confidence in the integrity of the US securities market. 13f securities generally include US exchange-traded stocks, closed-end investment companies, ETFs, certain convertible debt securities, equity options and warrants.
For companies, these filings are one of the most reliable sources for shareholder identification. This data is foundational for any investor relations program. 13F reports also help answer the perpetual question, “What’s going on with the stock?” Here is what we do with that information and how we make sense of it.
Monitor
13F forms are filed quarterly on a regular cadence. The filing deadlines for the remainder of the year are May 15, 2020 for Q1, August 14, 2020 for Q2 and November 16, 2020 for Q3. We compile a complete list of shareholders the day after the deadline. In combination with 13D/G filings from holders that own more than 5% of the shares outstanding and proxy filings, we can generate a very accurate list of the institutional holders. Identifying current investors will make all ensuing investor interactions and marketing activities more productive.
Track
Combining 13F filings over time demonstrates who is buying and selling your stock. While the filings provide a snapshot of holdings on the last day of the quarter, when compiled, they reveal important information like the largest buyers, sellers, position initiations and liquidations.
Analyze
Analyzing shareholder bases guides the development of an IR program. It starts with turnover, observed by the amount of change that is happening within your top twenty holders on a quarterly basis. While it is always good to see new investors, high turnover could explain volatility in stock price.
The goal is to achieve a balance in the types of funds in the top shareholder group. We want to see a healthier portion of index and long-only mutual funds rounded out by a lower number of hedge funds and quants that help provide liquidity. IR programs and investor targeting should focus on the actively managed long-only funds and hedge funds. Both of these groups perform fundamental analysis where meetings with management and anticipated catalysts play a big role in investment decisions. Thoughtful and consistent messaging and communication with these groups can yield positive results. The index and quant funds are passively managed, in line with rigid investment criteria solely based on the size or technical tendencies of a stock.
Evaluate
To gain an indication of how productive investor interactions and marketing has been over the past quarters, we compare the list of shareholders to the meeting history, looking for patterns. For example, if there have been multiple meetings over time that have not resulted in an investor taking a position, they could just be interested in the competitive landscape. This information can help make scheduling more productive. Depending on business circumstances, we also want to be sure that we are spending time with top holders at least a few times a year.
Plan
Use this information to determine how you want to spend time marketing to investors. Set goals to ensure you interact with current holders and target new investors in geographies that are underrepresented in your shareholder base. Lastly, do not just look at your company’s shareholders; look at holders of your competitors and the sector in general. These investors are obviously interested in your market and the size and stage of your company.
We hope this helps you understand how to better use 13F shareholder information, understand your current shareholder base and make plans to diversify this group in the future. Please feel free to reach out to our team for more information on shareholder monitoring and targeting.
Philip Taylor, Associate
Leave a Reply