New research report reveals trends in engagement between companies and hedge funds
The hedge fund world today is highly varied and includes many funds that act like long-only institutions. Despite this, IR teams on the whole continue to avoid targeting hedge funds.
Just one in five IROs say they directly target hedge funds of any kind, according to a new research report from IR Magazine, which is based on a global survey of more than 700 IR professionals.
Of the respondents that do target hedge funds, the most popular type is long-short funds (targeted by 70 percent), followed by multi-strategy funds (targeted by 51 percent).
Hedge funds are best thought of as a structure rather than a strategy, and within the now enormous universe of these funds are many that make attractive shareholders for listed companies. Recent years have also seen hedge funds seeking to build better relationships with corporates by overhauling their approach to meetings and hiring corporate access professionals.
The IR Magazine research indicates, however, that companies are not adapting their approach to the evolving hedge fund industry. Only 13 percent of respondents say their company’s attitude to engaging with hedge funds has changed over the last five years.
When asked about the challenges of engaging with hedge funds, one IRO from a US-based mega-cap healthcare company says: ‘They are very short-term focused and feel obligated to tell us how to run our business. It’s like having an avid player of fantasy football tell an NFL coach how to run his team.’
By contrast, other respondents talk up the benefits of engaging with hedge funds. ‘They have the capacity to take long-term positions and be good, supportive shareholders,’ says an IRO from a UK-based mid-cap firm.
