Hedge fund managers didn’t used to get invited to roadshows. Companies showcasing their credit credentials hardly felt inclined to invite along the guys who might be shorting their stock or working on some clever arbitrage that was bound to upset a market.
But times have changed. These days, banks put on some roadshows where hedge funds are the only guests. With hedge funds driving the convertible market, any credit that is serious about convertibles needs to explain its position to the buyers.
Even blue chip credits are keen to present their case to the hedge funds.
“We recently suggested to a global telecoms credit that they go and engage with the hedge funds. They hadn’t done it before and as a major capital markets player they needed to get their message out to all parts of the market,” says Tony Best, the JP Morgan managing director who heads up the investor side of the bank’s financial institutions group.
Like it or not hedge funds are becoming mainstream players and Mr Best predicts that during the next 10 years the percentage of European institutional money invested in hedge funds will rise from less than 1% to between 5% and 10%.
In some ways hedge funds are the perfect customers for investment banks: they often buy product without any prompting from sales. Sometimes they talk to issuers direct and tell them what they need. At other times they pass the message through the syndicate desk. Either way, when the deal gets done the bank earns its fee with minimal sales effort.
To complete their transition to the mainstream, all hedge funds need to do is acquire some brand awareness. Mostly they rely for reputation on the investment prowess of an individual.
It’s time for them to put on their own roadshows and presentations to improve understanding and build better reputations.
