Hedge funds spur demand for 'face time'

The fast-growing influence of hedge funds is introducing a new set of challenges for corporate investor relations departments, according to the latest research from Greenwich Associates. “Demands for face time with company management teams are coming from all types of institutional investors, but the trend is being driven by hedge funds,” said Bill Bruno, a consultant with the Greenwich, Conn.-based firm. Investor relations departments should brace for the diverse demands of hedge funds as seekers of information on both public and private companies, according to the research. “Not only do companies have to figure out how to accommodate a tremendous volume of requests by investors for private meetings, they also have to devise new strategies for servicing and managing the hedge funds that are becoming bigger and more active shareholders,” Mr. Bruno added. Last year U.S. institutional investors paid Wall Street nearly $1.75 billion in equity brokerage commissions specifically designated to compensate brokers for coordinating and facilitating face-to-face meetings between the institutions and corporate management teams at private gatherings or industry conferences. That figure represents about 35% of total U.S. institutional commission payments, hedge funds use about 42% of their commissions to compensate brokers for delivering meetings with company management teams. Corporate IR professionals should be intimately familiar with the booming business brokers have built selling access to company management teams,” Mr. Buno said. “More specifically, IR professionals should be aware that the time of their top executives is a valuable asset that companies should be managing strategically and for their own benefit.”