e-letter from HS Marketing

Be Heard.  Be Seen.  Be Understood.

January 2013

Dear Clients and Friends,

January 2013 brings new communication tools and opportunities to be heard, seen and understood as HS Marketing announces the launch of our new web presence at www.hsmarketing.com.

What’s new?

• Updated branding: designed to capture a fresh new look;
• Fine-tuned message: reflective of our evolving business;
• Flexible technology: adapted for mobile devices . . . as these communication tools are changing how and when we consume information and interact.

Discover how HS Marketing can help your firm raise its visibility and gain a competitive edge.  We’ve been serving the alternative investment community – hedge fund managers, futures trading firms, asset allocators and service providers – for two decades.  Contact us  to continue this discussion for your firm to be heard, seen and understood.

E-news archive: Read more >>>

HS Marketing is dedicated to enhancing the marketing communications capabilities of our clients in the alternative investment community.

Specialized industry knowledge, strategic insights, and passion for high caliber results are hallmarks of who we are. Clients count on us for creativity, communication strategies, focused messages and integrated solutions.

Our deliverables feature media relations and advertising campaigns, marketing tools, corporate identity / branding systems, and a variety of dynamic opportunities to be heard, seen and understood.

e-letter from HS Marketing

Communication vs. Communications: With or Without JOBS Act Final Rule

December 2012

Dear Clients and Friends,

Although the SEC has delayed (as of this writing on 12/5/12) issuing the final JOBS Act rule intended to lift the ban on advertising and general solicitation of private offerings, hedge fund managers still possess opportunities – within regulatory constraints – to communicate effectively with clients, prospective investors and others.  The overriding objective is to be heard, seen and understood!

Should you be more concerned with communication or communications? The short answer is “both.” This brief e-letter highlights these often-confused or misused terms, both of which are integral to marketing, public relations and investor relations.  Both are worthy of analysis and consideration by advisers to private funds and by service providers.

What are the nuances?

Communication

This singular noun “communication” refers to the act or process of exchanging and transmitting information or behavior including a personal rapport. Communication strategy and creativity should precede message development.

Communications

Unlike the singular form, the plural word “communications” applies to the different means of sending information, such as the technology, vehicles and systems for transmitting messages, also the tactics used in execution of a communication strategy. For example, advertising and media plans, public relations activities and events are marketing tactics that apply distinct communications channels.

Tips to leverage your branding opportunities

• Sharpen your “communication alpha” regardless of the regulatory winds, while preparing for a marketing sea change . . . post-JOBS Act.
• Create a communication strategy. Be sure that your value proposition clearly reflects the firm’s DNA! When effective, content marketing – built on strong messaging – can drive qualified leads, shorten the sales cycle and create public relations opportunities.
• Consider a broad range of distribution and means of engagement to build brand awareness. Include multimedia, web and mobile devices, social media, targeted industry events and public relations channels.  Get your message across as efficiently as possible.

You only have one chance to make a first impression. Contact us for a complimentary evaluation or inquiry. We’ve been in the marketing communications business, serving the alternative investment community, for almost two decades.

Sincerely,

Holly Singer, President, HS Marketing, LLC www.hsmarketing.com

Princeton Junction, NJ 08550 | tel. 609.275.1303

e-letter from HS Marketing

Preparing for a Marketing Sea Change . . . Post-JOBS Act

September 2012

Dear Clients and Friends,

The marketing of private placements is expected to undergo a sea change in communication opportunities and some challenges resulting from the SEC vote as of August 29, 2012 to eliminate the ban on general solicitation and advertising, as required by the JOBS Act. Once this proposed rule is finalized, hedge funds will face a wide range of external communication options that were previously unavailable for this space. What are some of the marketing challenges and potential risks? How can fund managers prepare?

Trends

The regulatory shift toward less restricted marketing of private placements coincides with an investor-driven trend toward raising the bar on the expected quality of hedge fund managers’ outbound communications. This combination could be a double-edged sword: the open floodgates resulting from a less restricted marketing environment are likely to increase the challenge of getting heard above the noise! “Communication alpha” as noted in our recent e-letter, may be considered an increasing source of value in supporting asset raising and retention objectives.

The Managed Funds Assocation (MFA) has continued to engage with the SEC and has commented to the CFTC in support of eliminating the ban on advertising and general solicitation of private offerings.

What are Some Marketing Best Practices?

Tip #1: Don’t neglect a broader marketing tool kit and opportunity set.

In preparation for the JOBS Act implementation, think in terms of broader dissemination of information. Thus far, in order to avoid jeopardizing Regulation D provisions (pre-JOBS Act), most fund managers have functioned with a core marketing tool kit:

• Pitch book, 1-2 page summary, DDQ;
• Performance report, investor commentary;
• Website: publicly accessible sections generally minimized to avoid posting fund-specific information and related performance details without password protection.

Outbound communication has been narrowly constrained.

Going forward, managers should consider casting a wider net to reach their target audience and brand the firm effectively. Without the long-standing Reg. D shackles, the private placement marketing tool kit and tactics may also include additional visibility opportunities:

• Website expansion and/or restructuring: consider building out the public message areas to provide further transparency regarding the firm, people, process and products/services offered;
• Press releases and media interviews: explore coverage beyond Pre-JOBS Act restrictions;
• Targeted advertisements, video/multi-media collateral and direct mail/e-communication and social media tools.

How will your target audience find you? Of course, you need to seek visibility where you can be seen and heard in person. The marketing budget should be weighted toward potential ROI. For example, if investors/asset allocators or other targeted audience generally attend specific industry conferences, be sure to participate in the right places with as visible a role as you can obtain and afford.

Tip #2: Focus on message differentiators

As the floodgates open from a less restrictive marketing environment, investors will be inundated with pitches. However, many fund managers may unwittingly undersell or undermine their capabilities by overselling performance. A longer lasting brand-building approach focuses on qualitative message differentiators such as the people/pedigree and process. In addition, the message should identify problem-solving benefits (using examples where possible) to the investor/clients.

Tip #3: Share your views with a wider audience

Investors, intermediaries and the media want to hear from industry experts. You can build brand identity and elevate your visibility by articulating your views on market developments, trends in your niche and how your firm is positioned while becoming recognized as a “go-to” source of credible information.

Traps to Avoid

It’s easy for managers to get side-tracked with the new-found wealth of marketing opportunities as they explore a wider mix of tools and tactics. For example, unless the planned advertising campaign reflects a well-articulated message that will resonate well with the target audience, the brand-building and business development objectives may not materialize.Fund managers should consult their legal counsel or compliance advisor before implementing new communications initiatives.

You only have one chance to make a first impression. Contact us for a complimentary evaluation or inquiry. We’ve been in the marketing communications business, serving the alternative investment community, for almost two decades.

Sincerely,

Holly Singer, President, HS Marketing, LLC www.hsmarketing.com

Princeton Junction, NJ 08550 | tel. 609.275.1303

e-letter from HS Marketing

Branding Your Business More Dynamically

March 2012

Dear Clients and Friends,

The process of building your brand offers opportunities to showcase your capabilities using dynamic marketing tools that may reinforce your communications strategy. Creating a compelling message isn’t enough. What can you do to help your target audience hear and see you? Which tactics will engage them in a more meaningful way?  What legal/regulatory considerations should be on your radar?

Key Trends

Investors are increasingly raising the bar on the expected quality of hedge fund managers’ outbound communications. For the past two years, SEI’s annual survey of institutional investors has highlighted the need for managers to make their strategies more understandable and clearly articulate their value proposition as well as risk mitigation methodology. Clarity of investment philosophy and risks is a priority. “Communication alpha” as noted in our recent e-letter, may be considered a source of value in supporting asset raising and retention objectives.

While there is no magic marketing bullet, investment managers and service providers are increasingly incorporating a digital component into their branding and ad campaigns. Firms of all sizes may take advantage of available tools to invigorate content and reinforce the brand identity building process.

Tips to engage your audience in a more meaningful way

Tip #1: Use multimedia

Multimedia presentations increase the impact, resonance and reach of your communications. This type of dynamic element can make it easier for your contacts to hear and see you. For example, a short video featuring the CEO will project your firm’s personality. Using videos and webinars can personalize the relationship-building process, highlight your expertise and strengthen the impact of message. People want interaction instead of reading a lengthy report. An audio/video commentary from the portfolio manager, particularly in an interview format, will reinforce the message and bring your story to life.

Tip #2: Use social media

If your firm’s strategy is very complex, your expertise and/or market views may be a great fit for tweeting, blogging and/or participating in online discussion groups. Build a following as the “go-to” educator in your sector, particularly for a less understood or complex strategy.

Tip #3: Animate your online presence

The use of animation may enhance fresh website content. For example, recent news and announcements appearing on the home page if animated will support the goal of engaging the viewer and lengthening the time spent on that site. For service providers, animated ads (vs. static) will help draw attention.

Tip #4: Share meaningful information to elevate your presence

Have you have created a timely survey or white paper? Do you possess expertise that can be communicated in a topical FAQ format or interview? If so, showcase those capabilities as an integral component of your public relations campaign in order to be noticed. Use social media and multimedia to highlight that message and incorporate a “learn more” link within your online outreach process.

Traps to Avoid: Legal/Regulatory Considerations

Attorney Richard Horowitz, partner in the investment management practice at Dechert LLP, highlighted his views regarding related legal/regulatory considerations as noted below: “This week, Congress passed the JOBS Act, which, among other things, removes the ban on ‘general advertising and general solicitation’ under Regulation D for sales to accredited investors. While this change will undoubtedly free up the marketing effort for private funds, an investment adviser must continue to be careful to avoid disseminating information that cannot be substantiated or is unbalanced. For fund managers, the message in your pitch book must be accurate and consistent with your offering memorandum. Now that most hedge fund managers are required to register with the SEC, managers will be subject to the advertising rule under the Investment Advisers Act which covers the use of testimonials and past specific recommendations, and which prohibits any advertisement which contains any untrue statement of a material fact or is otherwise false or misleading. The bottom line – fund managers should consult their legal counsel or compliance advisor.”

You only have one chance to make a first impression. Contact us for a complimentary evaluation or inquiry. We’ve been in the marketing communications business, serving the alternative investment community, for almost two decades.

Sincerely,

Holly Singer, President, HS Marketing, LLC www.hsmarketing.com

Princeton Junction, NJ 08550 | tel. 609.275.1303

e-letter from HS Marketing

Leveraging Your Communication Alpha

November 2011

Dear Clients and Friends,

“Communication alpha” may not have found its way into hedge fund managers’ jargon as frequently as the type of alpha associated with achieving stellar performance. Alpha is generally related to a manager’s skill-based returns in excess of benchmarks or risk measures. Nevertheless, “Communication alpha” may be considered a source of value in supporting asset raising and retention objectives, reflecting both the capability and willingness to deliver clear, consistent, frequent messages to investors.

What do investors expect as they are raising the bar on asset allocation criteria? How can managers achieve communication alpha without overstepping regulatory constraints? What are some best practices and traps to avoid? In this e-letter, three industry experts – Eagle Rock’s Jack Killion, Hedge Connection’s Lisa Vioni, and Alston & Bird’s Tim Selby – who shared a recent panel discussion program, “Hedge Fund Marketing & Capital Raising: Opportunities and Constraints,” highlight their views.

What are the Key Trends?

Jack Killion, Managing General Partner & Founder of Eagle Rock Diversified Fund, a fund of hedge funds created in 2001, highlighted trends and implications for managers as follows:

“Some of the key trends I see are: it’s getting tougher for hedge funds to raise capital, particularly smaller ones; investors are demanding more transparency and, with shrinking returns, investors are paying closer attention to the fees and expenses charged by hedge funds. Investors are also taking longer to commit to funds they are considering for the first time and often aim to slowly dollar cost average their investments into the funds they select.

Also, the investor capital that is dominating the hedge fund space is coming primarily from large global institutional type of investors, many with the resources required to do a good job of finding and evaluating hedge funds that meet their objectives. This is particularly crucial when it comes to them deciding whether or not to invest with hedge funds with complex investing and hedging strategies.

We are all living and investing in a global economy with a significant portion of the assets coming into hedge funds being from off-shore investors. Any hedge fund looking to really generate a significant asset base needs to be able to market to and accommodate off shore investors.

From a marketing perspective, it is important that frequent communications be maintained with potential and current investors. Weekly ‘flash’ numbers are a good thing and monthly updates almost mandatory. Investors don’t want to wait a quarter to learn fund results and their reaction to the market. Furthermore, while exceptional Investor Relations leaders can help maintain the connection between portfolio managers and investors, it is critical for fund managers to take an active role in attracting and retaining capital and maintaining solid relationships with all their investors.”

Lisa Vioni, President and CEO of Hedge Connection, where hedge funds and investors come together, highlighted the trend toward business management capabilities as an increasingly important expectation by investors looking beyond pure fund performance. Vioni states that, “Managing a hedge fund is not only trading a portfolio, but running a business. Each fund manager is an entrepreneur building a start-up company. There are many operational components to running a business that have nothing to do with trading. If a manager does not focus on running the business as well as trading the portfolio, he will fail. In fact, about 80% of new hedge funds will go out of business in the first three years because of this reason. Managers tend to be short sited and do not want to spend money on putting the proper people in place like a CFO, Director of Marketing and others, which puts them at a huge business disadvantage to those who do build the proper infrastructure.”

Tim Selby, Partner in the Alternative Investments Practice at law firm Alston & Bird, commented that the hedge fund community has entered an environment of increased regulations. “The use of social media has presented new challenges with analyzing acceptable forms of public communication by fund managers,” he noted.

  What are Some Best Practices?

Tip #1: Focus on the 5 “P’s” in communicating your advantages.

People, Philosophy, Process, Performance and Product are all integral to your story. Clearly articulate your means of differentiation or value proposition in each of these key areas. As you focus on running the business, the importance of the “People” factor and related team qualifications, depth of infrastructure, robust operations and human elements are critical to establishing and preserving the trust of investors.

Tip #2: Describe with real examples.

The best way to communicate your investment and/or risk management process is by using case studies as transparently and concisely as possible. Check out the e-letter, Pitch by Examples.

Tip#3: Become an expert presenter.

As Vioni noted, “Making a presentation is another form of communication. One must capture the attention of the audience and teach them something at the same time. You want to establish yourself as an expert during your brief time on stage. Take a look at any one of Steve Job’s keynote speeches. He is a master marketer and communicator. If you can capture just one tenth of what he does, you will make a lasting impression on your audience.”

Be sure to hone your elevator pitch to make a great first impression. If you cannot explain who you are, how you make money and your edge in less than three minutes, then you may appear to not really have an effective management style.

Tip #4: Use social media and multimedia to reinforce your brand.

Your expertise in a niche strategy or your market views may be a great fit for tweeting, blogging and/or participating in online discussion groups. Build a following as the “go-to” educator in your sector, particularly for a less understood or complex strategy. Using multimedia such as videos and webinars can further personalize the relationship-building process, highlight your expertise and strengthen the impact of your communications objectives.

  Are there Communication Traps to Avoid?

Trap #1: Unrestricted marketing.

Selby commented, “Registered investment advisers can publicly discuss strategies and market insight but should avoid unrestricted marketing of the performance results of privately offered funds. Unregistered advisers should avoid holding themselves out in any public communication as an investment adviser. Even within a pitch book or investor letter provided to pre-qualified investors, extra care should be taken in communicating outperformance compared to benchmarks, or presenting expected returns and winning trades (investment examples). Performance statements and illustrations must be balanced with the applicable risks.”

Trap #2: Public unsecured access to fund-specific information.

Selby commented, “Managers must establish a pre-existing relationship with potential investors so as to make a determination that they believe the investor is reasonably qualified to invest in their fund.”

You may be tempted to use Linkedin or a conference attendee list for prospecting but managers cannot provide fund performance until establishing a relationship and pre-qualifying the investor’s suitability. A manager’s website must delineate between general descriptive content posted in publicly accessible sections vs. fund-specific information which must be kept in password-protected sections of the website.

Trap #3: Infrequent communication/Inadequate access

Eagle Rock’s Killion states, “Failing to keep investors current on fund developments on a frequent schedule is one sure way to lose investors and their capital, particularly during turbulent market cycles like we have been experiencing. Of course this includes the fund founder and portfolio manager making himself or herself easily available to investing partners and prospects.”

You only have one chance to make a first impression. Contact us for a complimentary evaluation or inquiry. We’ve been in the marketing communications business, serving the alternative investment community, for almost two decades.

Sincerely,

Holly Singer, President, HS Marketing, LLC www.hsmarketing.com

Princeton Junction, NJ 08550 | tel. 609.275.1303