The 7 things you need to know about who you invest in

We know that investors want first hand information yet companies often fall short in providing shareholders with the information satisfaction they are looking for. There is a pattern of pushing information into the market with little to no reciprocation or two-way communication with investors. Without a strong culture of retail shareholders asking (or having the ability to ask) questions proactively, how can companies be aware of the individual thoughts or sentiment of their shareholders?

Here are examples of questions you can ask the companies you currently, or are looking to, invest in. 

‍

1. Who are the board members and what are their backgrounds?

To invest consciously is to invest in the company AND its people. The leadership and executive management team of a listed company are the treasure chest for all things strategic vision and execution of business strategy. As a shareholder, being aware of the board’s expertise and goals is important for having confidence in your investments. Notice how the title of this article refers to “who” not “what.”

‍

2. How do you plan to keep investors in the loop when big changes occur? How are you addressing shareholder concerns?

As a retail shareholder, you want to know that the company is listening to your concerns and acting on them. Part of this is knowing that the company has clear, two-way communication lines with shareholders to provide regular, specific updates.

‍

3. What is the reason for the drop in share price?

This question has got to be one of the top concerns on the retail shareholders mind. If you are concerned about the share price dropping, ease your worry by asking the company directly, simple as that.

4. How is the company addressing the recent controversy?

With any story or rumour it is important to get the facts directly from the source. Asking questions about specific decisions or events means you can get an answer directly from the company board instead of secondary sources. 

‍

5. How will the company continue to address gender equality? 

In 2021, women held 18% of board chairs (https://www.wgea.gov.au/women-in-leadership). Where do the companies you invest in fit into that statistic?

‍

6. What is the company doing beyond its requirements for ESG? 

Is the company planning on lowering emissions? What are they doing to contribute to preventing climate change/ renewable energy? If you are an environmentally conscious investor, this question is key.

‍

7. Why should I invest in this company? How will the company keep growing?

The golden question for the potential investors out there. There are plenty of forums, apps, chatrooms, friends and even strangers ready to give you their advice of what companies you should invest in. Asking why gives you greater understanding of how a company values its investors and what the benefits for you will be in the future. 

Diolog makes it as easy as possible to have two-way communication with the companies you invest in. Can’t talk to the Board? Get Diolog.