Lately, hedge funds like Paulson & Co. have been losing business and unfortunately for PR firms, there’s little that can be said to sway public opinion about it. Since August, Hedge funds have lost 0.6% since August. Paulson’s fund fell an entire 8.5% in September and was down an entire 12 points in 2015 through the end of September.
The short life span of a Hedge Fund, averaging about five years before petering out to little more than a flat line. “Most hedge funds fail: their average lifespan is about five years. Out of an estimated seventy-two hundred hedge funds in existence at the end of 2010, seven hundred and seventy-five failed or closed in 2011, as did eight hundred and seventy-three in 2012, and nine hundred and four in 2013. This implies, within three years, around a third of all funds disappeared.”
Silent PR
In the above article concerning Paulson’s declining profits, the last line notes, “Armel Leslie, a spokesman for New York-based Paulson with Peppercomm, declined to comment on the performance.” This isn’t a surprising strategy from the PR firm, as the best strategy when a Hedge Fund is faring poorly is to say nothing. Saying nothing and ignoring criticism until business gets better is sometimes the only option.
With the short life span and an already negative public opinion, doing PR for a company like Paulson’s Advantage Hedge Fund ain’t easy.
Social Media and Signs of Change
However, there are signs that hedge funds and their PR companies are growing more transparent with the effects of social media. On Peppercomm’s website, a goal of Hedge Funds in 2015 is to break out of the stereotype of being secretive and shadowy organizations and use social media to get more in touch with the media.
As a result, two-thirds of hedge funds have started Linkedin accounts and 10% of the funds have Twitter accounts. Monthly hedge fund tweets have numbered as high as 80,000 per month, and, as a result, funds have strengthened their relationship with investors and communicate more effectively with their potential clients.
This is good news for PR firms, who represent Hedge Funds, investors, and ultimately will help funds in the long run. It also signals a more humanizing approach to doing business for the funds. The most important suggestion in the above article by Peppercomm is for hedge funds to use social media in order to start listening to the buzz on social media in order to gain an edge on what journalists are saying and what clients are looking for.
More communication and awareness of trends means more accountability; more transparency means more client trust, and hopefully for the funds, this translates into a longer life span.