Leaping off of the Hedge Fund slush pile: How to get noticed during Capital Intros

September 30th, 2009
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Contributed by: Sims Wyeth, Sims Wyeth & Co
How to get noticed at capital intros, meet-the-manager forums, and other close encounters with potential investors --- With increased competition for assets among hedge funds that are perceived as more or less similar to your own in strategy and performance, what should a hedge fund manager do? One answer: Improve the impact of your spoken messages at capital introductions, meet-the-manager forums, and other close encounters with potential investors.

After the talking
I attended a meet-the-manager forum in New York where I was struck by two things. Most of the ten-minute talks were poorly prepared and poorly delivered, but one of the speakers was clear, passionate, and personable. When I circulated in the wine and cheese gathering after the meeting, the good speaker was surrounded by investors interested in exchanging cards, while the other speakers were awkwardly standing in a circle talking to each other.

Anecdotal, I know, but I would bet that the speaker who stood out won more business, and it made me think of a job I had years ago.

Slush pile man
When I was an actor in my twenties in New York, one of my day jobs was to read unsolicited manuscripts at W. W. Norton & Co., Publishers. An unsolicited manuscript is a work that is not represented by a literary agent. Most publishers have a renewable flood of these things arriving every day from the provinces (novels mostly) and they call the stack the slush pile.

Norton gave me a windowless office where stacks of typewritten manuscripts in cardboard boxes leaned against the walls. My routine as the slush pile man was to open a box, read the cover letter to get a feel for the author, and then dive in, ever hopeful for something gripping, original, or entertaining.

However, if I found grammatical errors in the cover letter, I began to doubt. If the author didn't capture my attention quickly, I became impatient. And if I found another flaw—a moldy cliché, a whiff of cornball romance, or a tin ear for dialogue, I put the lid back on the box, stretched a rubber band around it, scribbled my signature at the bottom of a form letter, and dispatched the whole thing back to where it came from. There were just too many manuscripts: I had to trust my gut.

The first hurdle
When speaking at a capital introduction or meet-the-manager forum, a hedge fund manager is increasingly like a novel on a slush pile. In such a situation, a manager's primary goal is to get over the initial hurdle; to create a positive first impression; to avoid giving the cursory listener any excuse to eliminate him from a list of potentially suitable managers.

If the manager is not well-known, or has not just recently sprung from a high status Wall Street firm; if he's not a golden boy with a golden pedigree; if the historical performance of his fund is solid but not extraordinary; if he's going to market for the first time, or coming back from a down cycle; if he is like most of us within the bulge of the bell curve, (or the foothills of the L curve) he has to somehow capture attention and create an impression that will make potential investors want to get to know him. He needs to impress quickly, tell a good story, and speak with authority.

Boring and confusing
The trick? Don't be boring, and don't be confusing.

Your goal as a speaker should be to have inscribed on your tombstone, "He Made His Point, and Bored Them Less." To accomplish this lifetime achievement, adhere to the following:

Ditch the Slides
Maybe you need a pitch book to compete, but please don't bring it to a capital intro in PowerPoint format and make it the star of the show.

Greenwich Research says that the top two criteria for selecting Hedge Fund managers are their credibility and capability— their alpha. For the investor, that judgment is both rational and psychological / emotional. So... make yourself the star of the show. The medium is the message (and you're the medium). Be personable, and don't give them something else to look at. Make them look at you.

Stuff the Bag
If it's a five-pound meeting, prepare five pounds of content and end on time. Good teachers create class lessons with a beginning, middle and end, and you should do likewise. You lose impact if you don't. Rule of thumb is two minutes per slide, if you're going to use them.

Begin, Be Brief, Be Seated
There is a lack of correlation between length of talk and impact. Have a good beginning, a strong ending, and put the two as close together as possible. Or as Mrs. Humphrey said to her husband, "Hubert, for a speech to be immortal, it need not be interminable."

So, How to Begin?
With a bang! Any communication that you are willing to pay for begins effectively. Newspaper articles begin with a headline. News broadcasts begin with a teaser. Your job at the beginning of a talk is to capture attention, and convince your audience that it's in their interest to listen.

Ride the Cycle
Listeners cycle in and out of attentiveness— mostly out. Twenty percent of your audience will be spaced out at any given time, so tell them the main headings of your talk when you begin, move through each section, and as you do, remind them where they are on the roadmap.

And remember this. He who captures and keeps more attention—wins!

Make it stick
Research indicates that attention getting messages are simple, unexpected, concrete, credible, emotional, and story-like in structure.

I worked with a manager who was great at telling stories about deals he was working on—what was going on in the company, who the players were—he made it dramatic and interesting. In fact, he brought several bottles of ketchup to a meeting to make a point about competition in the ketchup market. It was entertaining, memorable, and demonstrated his passion and expertise.

Get Ready for Prime Time
Rehearse. An audience doesn't want to see you struggling to say what's on your mind. They've come for a show, an organized and compressed presentation of thought. Know your lines: your opening line, headlines, story lines. Being prepared will help you come across in a conversational manner, too.

Think Human A/V
Know where to stand, either behind the lectern or out on the open stage. Know how to stand and move in such a way that you communicate the intangibles that motivate investors to take a risk with you.

Know how to project your voice effectively. There is overwhelming evidence that the tone of your voice carries a significant amount of information for the audience. In well-spoken English, there is a change of pitch on every stressed syllable.

Inform your face
If you're having a good time, inform your face. One reason Reagan was Teflon was because he could twinkle on cue.

Another Irishman, William Butler Yeats, opined on the subject of content and style in this way: "I always think a great speaker convinces us not by force of reasoning, but because he is visibly enjoying the beliefs he wants us to accept."

Medical science is familiar with the power of the placebo effect. If you communicate belief through your words, voice and body language, you and your ideas will be more infectious.

Content, shmontent
Numbers may be the language of hedge funds, but what if your numbers are similar to those of your competition? Then it comes down to something else.

Good content is necessary but not sufficient. To leap off the slush pile, you have to make an impact, which is the degree to which you create understanding, trust, and memory.

Speaking with impact is a hard corporate asset masquerading as a soft skill.

It's an asset worth raising.
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