Client Successes

Columbus McKinnon Corporation / Institutional Investor Targeting Program

Situation Analysis

As a newly public company (Feb. 1996), Columbus McKinnon (CM) was not well known among investors. The company had a relatively small base of institutional investors with ownership of approximately 21% of outstanding shares. This presented a problem because institutions ultimately drive the overall price of shares. CM management wanted to be certain that the stock market was fairly valuing the companys stock.

CM approached the agency about developing a program to improve the institutional ownership position of the company. The agency proposed a program that consisted of analysis of its financial position in relation to its peers and competitors, development of materials that properly positioned the company and an investor targeting program that identified institutional investors considered to have a potential interest in CM.

Research and Planning

The agency conducted research to determine which companies would be most appropriate to include in a peer group analysis. A large group of 22 publicly held diversified manufacturing companies was selected, after which the agency performed the following:

1. Conducted benchmark analysis of financial ratios and key indicators for CM compared to its peer companies and an industry index
2. Identified which institutions would be most receptive to investor marketing activities from the company based on ownership in peer companies
3. Identified investment characteristics that appeared to be most important to the institutions that are investor targets so that CMs strongest points were highlighted in materials
4. Developed an institutional investor marketing plan

The target publics for the plan were: institutional investors, especially those with a Value or Growth style and a Low to Moderate portfolio turnover rate (long-term investors) and machinery industry security analysts.

Execution

The most important and time intensive part of the plan was gathering information needed, analyzing the data and presenting it in a clear and understandable format. The agency used a variety of sources to collect information including: the Wall Street Journal, financial data sites on the Internet, corporate annual reports and public filings with the Securities and Exchange Commission (SEC). Once the financial and statistical data was collected and verified it was incorporated in a spreadsheet created by the agency.

The agencys investor relations staff then reviewed and analyzed the data and developed a benchmark comparison of CM in relation to its peers. The benchmark analysis indicated that CM was undervalued in relation to peer companies, according to commonly used valuation ratios. This indicated that CM would be an attractive potential investment for value-oriented investors. Growth investors were also identified as having a likely interest because of CMs strong record of revenue and earnings growth in recent years and an aggressive strategy for continued growth.

Institutions were identified by an analysis of the institutional holdings of peer companies. Institutions with substantial positions in multiple companies were selected for further analysis, including investment style (i.e. growth, value, indexing, return) and portfolio turnover and then prioritized by perceived interest in CM.

From the analysis the agency was able to identify and create a list of institutional investors who would most likely be interested in Columbus McKinnon, and vice-versa. These investors received a CM information packet. The packet included:

• Annual Reports
• Quarterly Reports
• SEC Required Public Financial Documents
• Collection of News Releases and Relevant Press Clippings
• Investor Fact Sheet

Evaluation

The targeting program was an unqualified success.

The program helped to increase CMs institutional ownership level to 37.2% as of March 31, 1997 from 23.0% exactly one year earlier. Between November 1996 when program started, through the end of March 1997, the stock price rose from $14.25 per share to $18 per share.

The program is on-going, but initial activities were completed within a budget of $15,000. CM's executive team was very pleased with the increased stock price, institutional ownership and attention from Wall Street, to the extent that we have been given an open-ended budget and directed to repeat our peer analysis every quarter.