“We're seeing an increase in activity,” said Daniel Simon, MD of Cognito, which works with hedge-fund clients in the US and Europe. “In an era of depressed performance, they realize they need to pay more attention to how they communicate with current and prospective investors. A surprising number of hedge funds [previously had] no coordinated way of communicating with their investors and no consistent message for prospective investors.”
CBS MarketWatch, referring to findings from Hedge Fund Research revealed in November, reported that the average hedge fund had lost 16% so far this year, compared to last year. Many hedge funds have suspended or imposed restrictions on withdrawals or redemptions to staunch the bleed.
“For hedge funds right now, many of them are facing the same issue – redemptions,” said Richard Dukas, president and CEO of Dukas PR. “There's unease among the hedge fund investor base.”
“The only thing spurring [hedge funds] to action is the possibility of making money or the risk of losing money,” Simon added. “Driving the need for communications is fear of losing investment and, for some hedge funds that are sensing a bottom to the market, the opportunity to launch new funds.”
The faltering economy has many hedge fund investors scrambling to pull their money, making communications with investors a main priority. Todd Fogarty, partner at Kekst, said there are more hedge fund pros approaching the firm for help crafting letters to investors and messaging for conference calls.
“They've become more thoughtful about how they talk about strategies driving investments and where they think the market is going,” Fogarty noted. “It's more qualitative commentary, rather than, ‘Here's the numbers. This is how we did.'”
There's also more strategy behind media relations.
“When the media checks in because they've heard a rumor... smarter firms are thinking strategically as to how to respond, instead of an automatic, ‘No comment,'” he added.