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American Direct Marketing Services Blog

Why Doesn’t “The Street” Love Me and My Penny Stock Company?

by Scott Casson | Jun 06, 2013

Marketing financial products and services to investors has always been challenging… however, motivating active retail investors and traders to take action and buy stock in the open market (i.e. your company’s stock, if you are a small-cap CEO) requires a sophisticated investor relations marketing program; one focused on financial branding, market awareness and compliant corporate communications.

There are a lot of companies clamoring for attention

Taking your company public doesn’t automatically mean Wall Street analysts and brokerage houses will cover your stock let alone give it a buy recommendation. As of May 2013, there were ~2,800 NYSE Euronext companies1 and ~3,600 NASDAQ companies2 that are publicly traded and vying for market exposure and coverage.

For the most part, stocks that trade on these two exchanges are considered to be in the upper echelon and must meet some very strict listing and reporting requirements to maintain their exchange status. As a result, these companies are highly transparent and therefore more likely to be covered by “The Street.”

Additionally, the NYSE MKT (formerly known as The American Stock Exchange) has ~800 listed stocks that might be considered the top tier of smaller cap companies. These companies are also more likely to “get a little love” from Wall Street in the form of research coverage and recommendations.

To truly complicate matters, there are ~19,000 public companies that trade Over-the-Counter (OTCBB, OTC Markets, Pink Sheets/Grey Market3) and close to 50,000 international stocks that trade on foreign exchanges4. A majority of the stocks that trade on the ‘junior exchanges’ fit within the microcap, mini-cap, nano-cap or as it is commonly referred to…the “penny stock” category.

This stratification of exchanges is intended to separate the wheat from the chaff or the high risk stocks from the blue chips. But a major side effect is that it’s far more difficult for companies that trade on lower exchanges like the OTCBB, OTC Markets or Pink Sheets to get noticed by Wall Street, retail investors, small cap investors or penny stock traders.

Penny stock rules limit exposure and trading too

Here’s a key reason why: Historically it has been difficult for stockbrokers and most financial professionals to recommend penny stocks (loosely defined as stocks priced under $5.00) or stocks that don’t trade on senior exchanges. The rules for listing and reporting on the over-the-counter markets are A LOT more lax, resulting in lower corporate transparency.

As far as Wall Street is concerned, this reduction in transparency creates a higher potential risk for a company’s stock and consequently, brokerage firms usually restrict or simply don’t allow brokers to recommend penny stocks to their clients. That’s not to say that brokerage firms don’t trade penny stocks but generally the investor has to initiate the request because of the speculative nature of such trades.

Additionally, under the “Penny Stock Rules,” Congress has prohibited broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934 ("Exchange Act") and the rules thereunder.

These SEC rules provide, among other things, that a broker-dealer must (1) approve the customer for the specific penny stock transaction and receive from the customer a written agreement to the transaction; (2) furnish the customer a disclosure document describing the risks of investing in penny stocks; (3) disclose to the customer the current market quotation, if any, for the penny stock; and (4) disclose to the customer the amount of compensation the firm and its broker will receive for the trade. In addition, after executing the sale, a broker-dealer must send to its customer monthly account statements showing the market value of each penny stock held in the customer's account.5

Those are a lot of hurdles for a broker and his firm to jump over and there is also the heightened risk of loss and potential litigation, so many firms just say…NO!

Competition for the investor’s ear increasing

Furthermore the globalization of investor participation has lead to increased competition between public companies (domestic and international) that wish to target small cap and penny stock investors to buy their stock. And when you consider the recent rise of Crowdfunding or NASDAQ’s New Private Market (NPM) as well as private equity fundraising and angel investor networks, competition to gain exposure and attention from individual investors has never been fiercer.

Integrated strategies include digital and traditional media

This overcrowded and tightly regulated investment environment makes it necessary for public companies to be proactive in their financial and corporate communications efforts. This is why it’s important for a company’s investor relations executives and their respective investor relations firms to execute a fully integrated, proactive retail investor relations marketing campaign to accomplish specific goals such as: increasing the shareholder base, price support or appreciation, improved market liquidity and long term investor retention.

In order to accomplish these marketing goals you need an investor relations strategy that consistently delivers your company’s financial and corporate message to the retail investment community across multiple media channels: social media (Twitter, Facebook, Linkedin), digital media (email, paid search, SEO) and even the tried and true direct mail program.

Three key building blocks for a successful retail campaign

Mike Casson, President and CEO of Casson Media Group, Inc. ( a Dallas, TX based Financial Communications and Investor Relations specialist, and our parent company states:

“When your company is publicly traded, you really have two
businesses to focus on: one that makes the widgets and the
other being your financial brand or your stock symbol. Both
are of significant importance to Wall Street and to retail investors
and traders.”

Mr. Casson has worked with numerous public companies and investor relations firms on their financial communication marketing efforts. He also adds,

“Retail Investor Relations programs for microcap and
small cap companies should be designed to optimize a
sustainable market value for the client company by integrating
News, Research & Editorial Support. These three key
building blocks are the foundation for a successful retail Investor
Relations program which ultimately results in a broader and
more solid base of market support for the company.”

The news component

There are thousands of press releases issued daily by the wire services making it difficult to get the right type of exposure to the retail investment community. Most investors who read and act upon the news and press releases of public companies do so because they are a current shareholder or already have that company’s stock symbol on their radar screen.

As a result, in order to successfully brand your company’s stock symbol you have to target new investors. By proactively distributing your press release to investors shortly after it hits the market, your company can gain exposure for “significant events” that are crucial to making a decision to buy your company’s stock. Otherwise, it most likely will go unnoticed.

Or in other words you need to get your press releases and company news directly into the hands, inbox or in front of the faces of potential investors via email, direct mail, social media and digital media. (One can also use investment newsletter subscribers, active investor email lists and databases, financial lists, penny stock lists, online communities, stock clubs, etc.)

Third-party independent research

Another crucial piece of your Investor Relations program should include proactive distribution of a third-party independent research report on your company to the retail investment community.


Because a lot of retail investors and traders make their own investment decisions…especially with their riskier or speculative investments. These are self-directed individuals...the ones you want to deliver your message to. As a result these action minded speculative investors find third-party evaluations and recommendations extremely valuable. And who better to foster an investor’s investment decision than a Certified Financial Analyst? An experienced small-cap CFA can make a compelling investment case for your company through a well written/well-documented research report.

Many companies understand this and secure a report for these purposes yet fail to carry on to the next critical step: distribution. Why secure the research report unless it’s going to be distributed to and read by the intended investor audience?

Remember, most investors have no idea your company exists. And if they do, they obviously have not made the decision to buy your stock…yet. That’s why proactive distribution of your research report to the same audience you’re communicating with is so important.

It gives them more fundamental reasons to consider buying your company’s stock today!

Casson Media Group's research report distribution strategy specifically leverages the investment highlights and recommendation of independent third-party research. They can distribute a recently released report (or secure an institutional quality report for you in about 10-14 days) to their active investor audience across multiple media channels.

Editorial endorsement and support

Just as a CFA can add credence and credibility to your company with a research report distribution strategy, an editorial endorsement from a reputable financial publisher can properly position your company in front of an active investor audience and motive them to take action (i.e. buy your company’s stock).

For example, through one of Casson Media Group’s affiliates, “MicroCap Marketplace (,” a “paid-for” investment newsletter, an editorial endorsement can be secured for qualifying companies.

Additionally, your Company can be featured in multiple “Special Issues” of the MicroCap MarketPlace newsletter distributed to 360,000 serious individual and institutional investors, including registered members, subscribers and a qualified readership audience. The MicroCap MarketPlace investor audience is looking for smaller companies (generally less than $500 million market cap) with unique technologies or business models, experienced management teams and clearly developed strategies that if executed properly can provide superior top and bottom line results, thereby maximizing shareholder value.

Here’s the “Bottom Line”

Investor relations and financial communications specialists like Mike Casson at Casson Media Group, the MicroCap MarketPlace and its many affiliated media assets including sister publications, websites, research report distribution programs, investor lists, investment newsletters and proprietary investor databases, can be leveraged for your company´s benefit.

They can draw upon a wealth of small cap investor relations and media experience to help you accomplish some of the main objectives of a retail investor relations program such as:

Primary Program Objectives:

1. Expand corporate awareness and media coverage
2. Broaden retail and institutional shareholder bases
3. Improve liquidity and trading volume
4. Increase interest for potential investors

And successful Financial Branding/Communications Programs can help achieve a stock price that reflects a company´s true intrinsic value.


1. Reducing cost of capital
2. Facilitating mergers and acquisitions
3. Creating wealth for key employees and advisors
4. Providing an important recruiting tool for attracting and maintaining the best possible
5. Helping clients achieve optimum, sustainable market value for their securities.

So if you’re a small cap or penny stock CEO or possibly an investor relations professional looking for alternatives to your current IR strategy with the above objectives in mind, this type of financial communications program could be a viable solution. Success can be achieved through a skillful integration and professional presentation of corporate news, investment research, editorial support to qualified investors and shareholder audiences through proprietary media channels and strategic affiliates like the ones Casson Media Group offers.

If you’re interested in learning more about Casson Media Group and how they can help your organization achieve your investor relations and financial/corporate communications marketing goals, I’ve listed the contact information below:

Casson Media Group, Inc:

14800 Landmark Blvd.
Suite 190
Dallas, TX 75254

214-634-4967 (corporate office)
214-905-3829 (fax)

1) [Source NYSE Euronext]

2) [Source NASDAQ OMX]

3) [Source OTC Markets] 

4)[Source Wiki Answers]

5) [Source SEC]
      All ADMS lists are guaranteed to be of the highest quality in the industry. Lists are updated quarterly, NCOA'd twice a year and certified to be 93% accurate.