Leading the Revolution in Hedge Fund Communications

From “no comment” to front page news and social media

TOM WALEK, PEPPERCOMM, IN CONVERSATION WITH ROD SPARKS

Tom Walek has been on the front lines of hedge fund PR and communications for two decades. Working with some of the world’s biggest and best known fund management firms,as well as scores of emerging leaders, first at his eponymous firm and now as part of the integrated communications agency, Peppercomm, Walek and his team help hedge funds enhance communications, become more transparent and achieve deeper relationships with clients and prospects. As the winner of The Hedge Fund Journal's 2015 “Outstanding Contribution: Hedge Funds, Media Communications” award, Walek talked with THFJ Publisher Rod Sparks about hedge fund communications – where it’s been, where it’s going.

RS: Where was the hedge fund industry at, in terms of marketing, when you first started?

TW: Starting nearly two decades ago at Walek & Associates, we worked with hedge fund managers primarily handling media relations. That was an era when the typical interaction between hedge funds and the media was, “no comment.”

Even that usually only occurred in the context of either great performance or really bad performance. At that time, hedge funds debated whether they could put their name in the lobby of their building. Some lawyers even advised that hedge funds couldn’t hand out business cards. It was all viewed as taboo marketing. Even under the spotlight of the news, if fund executives talked to the press, they were taking risks.

We worked within that environment helping hedge funds manage their press. We also started talking with these managers about the importance of brand, advocating that hedge funds start talking about what they do and how they do it. Not about their funds but about the markets and about what they see, their expertise – what we now call thought leadership.

RS: So how have things evolved?

TW: The evolution of hedge fund communications has been nothing short of revolutionary. A recent Peppercomm study showed that the media is talking to and writing about hedge funds at record levels, that two-thirds of the largest hedge funds are using LinkedIn and that public hedge fund web sites are becoming much more commonplace. Add to that the live-Tweeted and broadcast hedge fund spectacles of SALT, Ira Sohn and Delivering Alpha and you get the picture of the radical change in hedge fund communications going on today.

Regulatory changes are enabling this – hedge funds becoming Registered Investment Advisors and, later, the JOBS Act, lifting restrictions on general solicitation. And then, of course, liquid alts came along – hedge funds getting into UCITS, ‘40 Act products, more mainstream investments. Many previously private hedge fund companies are now opening to new audiences of investors and the intermediaries who distribute these funds.

Finally, don’t underestimate competitive pressures. Traditional long-only shops are now well entrenched in alternative strategies on both the institutional and retail levels. They bring in resources, marketing expertise, big sales staffs and deep pockets. In response, hedge fund executives must really step up their game.

RS: Agencies such as yours are increasingly referring to themselves as marketing communications agencies focused on brand building, brand protection and lead generation. How have you been able to help hedge fund managers in these areas?

TW: As Walek became part of Peppercomm in 2013, we added a great deal of expertise on top of handling media relations for hedge funds. Today’s highly competitive environment to attract and keep investors means hedge funds must think about their business as well as their portfolio. We help managers think about and take action to identity unique messages. Those messages, along with the look and feel and culture and intensity must translate into a well-defined brand that investors recognize and trust.

We help managers develop brands that attract and retain clients, that strengthens the relationship between fund manager and fund investor and takes it beyondthe latest performance numbers.

RS: Why the tie-up with Peppercomm?

TW: Walek & Associates put itself on the map as a leading PR firm working in the hedge fund space. We were pioneers. As the market changed, we needed to change too. Being part of Peppercomm means we have the integrated marketing communications expertise that today’s clients demand.

For some clients, it’s still all about media relations, deal and transaction support, and communications. For others, we are pushing boundaries while mitigating risk. Our mandates include brand and corporate identity, websites, content strategy and developments, social media, investor relations and events – the full spectrum.

RS: When it comes to actual take-up, are managers listening to what you’re saying to them, or do they say, “Well, that’s interesting; we know we need to think about doing something along these lines, can you give it to us in bite-size over a period of time?”

TW: Yes they are listening to what we are saying and to what the market is saying. And, yes, many are taking small steps. It’s an evolution.

Competitive pressures. Regulatory changes. Better search engine performance. Enhanced transparency. Bigger business goals. Alone and together these factors are pushing today’s managers to engage with the media a bit more confidently, open their websites, and publish unique content with their own POV, demonstrating insight and expertise. Investors want performance, of course, but they also want a relationship; a narrative, a story about the firm that they can trust and believe in for the long-term. That’s where brand and all of its touch points come sharply into play.

The hedge fund marketing communications game has changed. There are real opportunities to define and differentiate your firm away from its peers. We are helping firms take these steps on the path to achieving much bigger goals.

RS: Do you think hedge fund managers are now more willing to engage with the press than they might have been in the past?

TW: The question for every manager is this: When the press calls, what are you going to do? How are you going to engage?

Look at the numbers. The media wrote more than 100,000 stories in 2014 about hedge funds – that’s a record high. That’s up some five-fold in the last decade. Media attention to and interest in hedge funds has never been higher. Hedge funds are involved in nearly every activist situation, every major financial transaction, and every significant M&A deal that makes today’s headlines.

And in every one of those situations, the hedge fund or funds behind those headlines received calls from journalists seeking comment. Just as they are getting calls for stories about market outlook, market sentiment, market structure and related topics. And more hedge funds than ever before are learning to engage with and manage their media exposure, just as they manage every other exposure they face. Whether they want more or less press visibility, better coverage or just want their opinions and perspective to help shape the press coverage already happening, sophisticated managers are taking steps to manage the conversation online and off to achieve their own goals.

RS: How much of your offering is about managers interacting with investors and their pipeline of investors?

TW: Everything we do is about engaging with investors, prospects, deal partners, intermediaries, regulators – all the key audiences for our hedge fund clients. From a strictly media perspective, every comment, every piece of news, every article, every interview – on-the-record or off-the-record – is an opportunity to spotlight each client’s credibility, expertise, insights and leadership.

On a larger communications platform, it’s all about delivering brand messages; defining, differentiating, and building trust for our clients, large and small. All communications channels must work together to present to those key audiences a unified, cohesive statement about our clients. Make no mistake; this does build the investor pipeline. We’ve seen it happen again and again. Being included in an article, featured in a magazine, included in media rankings or spotlighted with a by-lined article or broadcast interview leads to investor interest.

RS: Do your managers appreciate that you may have something interesting to say about the way they present their letters, and that they should listen to what you say to them?

TW: I think they all have an appreciation that their investor letters, at any given time, can make it into the press, try as they might, and try as they do, to keep them private. If any given fund is doing anything interesting, by virtue of its size, reputation, market position or performance, the media will get hold of their letters and may publish those letters to the world, in whole or in part.

With that in mind, it’s imperative that firms write these letters with a leak in mind. From that perspective, it’s another opportunity to tell their story, offer the larger view, provide deeper insights into the thinking behind the numbers and the expertise that guides the fund. In good times and bad, investors want to hear a consistent, smart, clear story from managers. Investor letters are just one more way to communicate.

RS: How is the tie-up with Peppercomm going? Why did you do the tie-up?

TW: It has been a very exciting two years, since the acquisition in 2013. Being part of Peppercomm takes our client service to an entirely new level. Peppercomm now brings to market nearly two decades of hedge fund communications experience combined with a fully integrated service offering that speaks to any need a hedge fund organization may have. Importantly, too, Peppercomm’s broader experience with consumer, B2B and professional services clients allows us to tap into experience and achievements from other sectors and offer a fresh and vital perspective that other firms simply do not have.

RS: You are a financial PR veteran – 30 years in the business. Do you look at the hedge fund industry – roughly 20 years old in Europe and 45 years old in the US – and think we are entering a period where businesses like yours can really make difference to hedge fund managers?

TW: Hedge fund managers are calling on the strategies and tools of communications more than ever. And this trend will continue. Just in September and in the face of declining, volatile markets we’ve seen a few hedge funds roll out social media, videos, white papers and media relations in campaigns to reach, calm and educate investors. This has never been done before.

The $3 trillion and growing global hedge fund community is no longer a bit player on the financial stage. It’s a powerful influence, often in the spotlight and hedge funds are using this spotlight to influence companies, move markets, drive change, and be strong advocates for investors. In this role, hedge fund executives are learning to use communications in effective and influential ways.

As business executives, hedge fund managers realize the importance of developing deeper relationships with investors by playing a clear leadership role that investors can embrace, through good times and bad. This is even more important for hedge funds that are looking to become successful, multi-dimensional asset management firms. Going forward, we will see the inevitable decline of the star, individual manager in favour of strong teams, differentiated products and clearly defined brand names.

As an industry, too, hedge funds collectively must better use integrated communications to educate and advocate regarding the value of hedge funds ina diverse financial landscape. For example, hedge funds are becoming a big issue in the current US presidential election cycle, coming under fire from candidates on both sides of the aisle. The industry must do a better job explaining itself and its value to individuals, regulators, business leaders, media, legislators and society at large. There are many challenges and opportunities facing hedge funds for the integrated communications firms that serve them in today’s environment.

RS: Many thanks Tom.