San Antonio-based Argonaut Group, Inc. engaged Pierpont to build and operate the company’s investor relations function. More than two years later, the relationship remains intact and Argonaut Group boasts an investor relations program equal in stature to many of the largest companies in its peer group.
At the outset of the engagement, Argonaut Group (Nasdaq: AGII), a national underwriter of specialty insurance products in niche areas of the property and casualty market, was in the midst of a successful business turnaround. Through strategic acquisitions, a geographic shift of business and a complete management overhaul, the company felt it was time to share its new story with Wall Street. The financial community’s perception of Argonaut Group, however, lingered in the past due to its total lack of communication during the transition.
To elevate and broaden the financial community’s perception of Argonaut Group, Pierpont formulated communications strategies that would leverage the company’s improved outlook for consistent growth and profitability. A major focus was communicating the company’s plans for growth, and validating management’s ability to execute those plans, by conveying the progress and results of the company’s turnaround activities. A strong effort was also made to increase the frequency of communication to existing and prospective investors.
Pierpont recommended that Argonaut Group’s investor relations program be designed to achieve the following objectives:
- Increase awareness of ArgonautGroup’s investment potential amongkey financial audience
- Increase demand for Argonaut Group stock by elevating the quality and breadth of the existingaudience
- Optimize Argonaut Group’s valuation based on its performance in relation to the performance ofits peers
- Elevate the effectiveness and reach of the current messages being given to the financialcommunity
- Broaden the network of sell-side analysts following the company and writing reports onArgonaut Group
- Increase awareness of the company with buy-side analysts and portfolio managers throughparticipation in investor conferences and one-on-one and group meetings.
Key tactics included:
- Implement quarterly earnings calls to keep stockholders and research analysts informed of progress
- Target institutional investors in Argonaut Group’s peer group to broaden its investor base
- Target the smaller institutions and money managers who invest in small-cap companies
- Participate in fee-based investor conferences until invitations are extended by banking firms
- Schedule one-on-one and group meetings with targeted buy-side analysts and portfolio managers
- Target the retail market by developing relationships with sell-side analysts and investment bankers
- Create, and drive traffic to a best-in-class investor relations Web site.
Six quarters into Argonaut Group’s Wall Street outreach program, the company maintains a sophisticated IR presence and continues to increase its awareness in the financial community.
Major program accomplishments include:
- Increasing the number of sell-side coverage analysts from one to four
- Presenting at numerous investor conferences, including major insurance industry conferences geared toward professional investors in the sector
- Implementing a best-practices investor relations Web site that facilitates effective communication with the company’s key financial audiences.
The outreach effort also introduced Argonaut Group to Chicago-based Raymond James & Associates, which became the company’s lead investment banker for its over-subscribed secondary stock offering that raised $75 million.
Market demand for Argonaut Group’s stock has more than doubled since the program began and its market capitalization has increased to a high of $550 million in April 2004 from a low of $189 million in April 2003.