Hedge fund media: Good, bad and ugly
New York magazine has a feature on mega-hedge fund Bridgewater Associates. The piece focuses on the unique culture at the firm and founder Ray Dalio’s Principles, a 110-page manifesto on his view on what it takes to succeed in life and work.
There is not much new in this piece and not much PR value for Bridgewater in the story. Like virtually all the reporting on the hedge fund industry, the story focuses on secrecy, outsize personality of the founder, and quirks of the firm and its people (the story never lets you forget that “cult” is the first word in “culture”). It even has the mandatory benchmarking of conspicuous consumption (Dalio compares favorably to others — in that he is less ostentatious).
In terms of good, bad and ugly reporting about hedge funds, this story ranks merely as bad, although had the topic of art collections or automobile collections come up, it would be ugly. Bad stories perpetuate myths and stereotypes about the misunderstood hedge fund industry. Ugly stories distort reality.
What should hedge funds aim for? Simple. Hedge funds should work to create stories that discuss why hedge funds exist and illustrate the valuable services they provide clients like pension funds and other real money institutions. It is not clear that Bridgewater participated in this story, although they no doubt had the chance. I would make it a prerequisite of participating in any kind of feature story or profile that the reporter interview and quote clients about my fund.
That would shift the focus of hedge fund reporting from “supply issues” like funds opening, closing, size of funds, returns and hedge fund personalities to “demand issues” like why smart, professional money managers think hedge funds are a necessary part of our capital equation.
An example of very good story on a hedge fund happens to focus on Bridgewater. It includes insight from clients, including this one: “I view them [Bridgewater] more as a partner than a vendor,” says John Lane, the director of Eastman Kodak’s $7.5 billion pension portfolio, which has had money with the firm since the late 1980s. “We don’t make a major change here in strategy without calling Bridgewater to get their view…Of all the investment firms we work with,” he says, “they’re the most trusted.”
That is powerful stuff and more journalists should be educated by hedge funds about the demand side of the hedge fund equation. Go ahead, make my day (and talk to my clients).