HFN Conference: Investor Relations, Cap Raising

Date: Monday, October 27, 2008
Author: HFN Daily Report

A portfolio manager must take an active role in capital-raising as well as the entire non-investment operation of his or her hedge fund, an industry panel stressed Thursday.

Panelist Matt Hoffman, chief investment officer of Weston Capital, told the audience at the HedgeFund.net 2008 Portfolio Manager Summit that manager access is crucial.

"If I am only talking to the marketer, then I think something is wrong," Hoffman said.

Hoffman pointed out that as a CIO of a fund-of-funds he is in particular keen on contact with any startup manager.

"You cannot expect to speak to Kenneth Griffin," Hoffman said, "but if it is a new manager, I want access."

The panel discussion, "Maximizing Return From Investor Relation," spurred George Lucaci to stress early manager involvement in the capital-raising process.

"You do not want to have the manager sitting in an office under a sheet and then at the end rip the sheet off like, 'Here is our genius,'" Lucaci said.

Lucaci, a Channel Capital Group managing director, also emphasized that investor interaction should be scripted, not open-ended.

"You cannot walk into a room and ask, 'What do you want to hear?'" he said.

Panelist Ron Geffner, attorney with Sadis & Goldberg, said strong investor relations began before a face-to-face meeting with a proper manager review of the prospectus.

Geffner said often a manager will not review the document to ensure that the material is aligned with the strategy.

Panelist Chris Mulhern said that point underscored institutional investor emphasis on due diligence. Mulhern is chief operating officer of Butterfield Fulcrum Group.

A question from panel moderator and Channel Capital Group Managing Director Joel Schwab prompted a humorous aside from Geffner.

"You know I hear 'down 10%' is the new 'flat,'" Geffner said.