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Got some news? Brokers hate it when they’re the last to know

Cannings Purple’s Investor Relations Director, Andrew Rowell, treads the fine line between marketing and promoting your company — and  compliance with ASX listing rules.


Let’s say you have been heads down, focused on building your business, and after a few months you pop out a series of ASX announcements that, on small volumes, start to move your share price northwards.

The usual next step is a series of broker meetings where you proudly show off your achievements and relief that the market is finally understanding the value in your story.

So why was the brokers’ reaction to your news only lukewarm?

Surely they would be excited by what you have achieved and want to get their clients to pile in?

The simple investor insight is that brokers hate being the last to know when good news breaks.

They make money for their clients by being ahead of the curve and identifying opportunities before the shares have gone for a run.

By presenting to them after the fact, you are effectively rubbing their noses in it by highlighting how well other investors have profited.

This then leads to the question:

When is the best time to engage with brokers, fund managers, analysts and investors?

The two simple answers are – early and regularly.

An early meeting sets out your vision and plans for the coming year, highlighting the milestones you expect to achieve over this period.

Regular follow-ups, either in person, via email or telephone, let these decision-makers know how you are progressing against your plans.

When you start hitting your marks and the results you expected start to flow, you will have an investor base that is up to speed and ready to take advantage of the positive newsflow.

But how does this strategy fit with disclosure laws?

We get many queries as to how broker briefings gel with compliance with ASX Listing Rule 3.1 regarding continuous disclosure.

There is often a reticence to engage with brokers before results are known because of a fear that too much will be said, or questions will be asked that you don’t want to answer.

Naturally, you are not going to go into a broker meeting and reveal all your secrets and breach your directors’ responsibilities, but it is useful to understand what the broker wants out of this meet and greet.

Brokers go into meetings with companies trying to find out three key pieces of information:

1. How much money can I make?

2. When will I make it?

3. How much money can I make?

Yes, the double-up is deliberate.

Brokers are looking for time and event markers to help them work out when they should take action. Telling them that results are due in six months means they don’t have to ring their clients right now but can follow the story.

Informing a broking desk that what you have been promising the market via announcements is getting close to being delivered is a trigger to pick up the phone in the near term.

Now you don’t need to (nor should you) tell the brokers what the results are likely to be.

They are simply wanting to know what the impact might be and when it might occur.  

At the end of the day, brokers are your key salespeople in conveying your message.

Keeping them up to date with everything you are doing allows them to better sell the message to their clients and to be there as active supporters when the results start to flow.