Keeping up with insider stock transactions during the coronavirus crisis

David Lamb

Among the many dramatic effects the coronavirus has had on the world’s cultures and economies, one that directly impacts the ability of major donors to give is the stock market’s dizzying plunge in value. Prospect researchers and relationship managers find themselves needing to re-evaluate prospect capacity and the timing of proposals.  ResearchPoint can provide some helpful insights to aid this process.

These suggestions will be most useful for ResearchPoint users who have previously conducted a WealthPoint public data screening on a significant portion of their constituent database – or at least on their major gift prospects.  In order to understand the stock value changes for your public company insider constituents, you must know who they are in the first place.  A WealthPoint screening identifies those constituents for you.  A group screening like this is a normal process for a majority of ResearchPoint users.  What follows assumes you have done this.

In ResearchPoint Essentials and Professional versions, you should enable data refresh if you haven’t already.





The “wealth and ratings data” configuration is found on the Prospects page under the configuration list.  With data refresh enabled ResearchPoint performs a regular check in several sources for any changed information.  New information is then pushed into your constituent records without your intervention. 

The source for insider stock holdings, Refinitiv, is updated nightly.  This means that when your insider constituent performs any kind of stock transaction, the record is updated and ready for you to review in a timely manner.  Although ResearchPoint will not send you an email about this, you can create a query that will update automatically whenever stock is traded, functioning as an alert of an important moment in your prospect’s financial life.  You will want to check this query on a regular basis.

This information gives you several insights.  The total number of shares is updated following the transaction, as is the stock price.  You’ll also see what kind of transaction it was (purchase, sale, gift) and any cash value associated with it (proceeds or cost).

I recommend the following query configuration.
Include records where:

• Wealth Information\\Securities\\Confirmed is equal to Yes
• And Wealth Information\\Securities\\Transaction\\Transaction date is on or after last month
  
  (adjust the time frame to suit your needs)

Results fields to display:

• Name
• Wealth Information\\Securities\\Issuer name
• Wealth Information\\Securities\\Transaction\\Transaction date
• Wealth Information\\Securities\\Transaction\\Transaction description
• Wealth Information\\Securities\\Transaction\\Transaction value
• Wealth Information\\Securities\\Transaction\\Share price
• Wealth Information\\Securities\\Transaction\\Quantity
• Wealth Information\\Securities\\Transaction\\Ownership type

There may be other confirmed public company insiders in your database who don’t trade stock within the specified time frame.  They will not appear in this output.  You can create a research list of confirmed insiders and periodically submit those names for WealthPoint screening during the current period of high stock market volatility.  This will update the share price for those insiders and recalculate the value of their holdings.

Finally, be aware that there are inevitably investors in your database who are not insiders.  Because their stock holdings are private, there is no mechanism for estimating the value of their portfolios.  With respect to all your major gift prospects and donors, insiders or not, it may be helpful to keep the current downturn in the market in perspective.  On one hand, the sudden drop in market value can feel traumatic and shocking to investors.  On the other hand, at the very bottom of the stock market’s recent track, the Dow Jones Industrial Average retreated to its value in late 2016.  If you had a healthy portfolio then, it should be relatively healthy today.

To be sure, hundreds of thousands of people in the United States and across the world have lost their jobs recently – temporarily we hope!  However, many of our major gift prospects and donors are not as dependent on cash salary as our annual fund donors are because their wealth derives from their investments, not their salary.  Though their portfolios are less valuable than they were just a few months ago, they are still quite valuable.  A prospect who could make a major gift four years ago is probably still capable today.

Despite the economic upheaval our world is experiencing, your mission still matters.  Donors still care about it.  Now is not the time to stop asking, but with sensitivity to changing circumstances, continue to respectfully invite people to do the good deeds they want to do.

 

Bonnie Lodevole

Thanks so much for your posts - they are all interesting and informative for this time and for learning about ResearchPoint.  We have not yet used the program but are looking at it now.

Bonnie Lodevole - Millbrook School