By David A. Goldman
Hedge fund managers are notoriously reticent when it comes
to talking about themselves publicly and, save for a few,
they’ve always had a bias against speaking to the
media. Regulatory barriers, including the ban on general
solicitation have sometimes stood in the way. But those walls
are close to coming down. Still, many managers wonder why they
should even care about their online reputations. After all,
most hedge fund investments are borne from private placements.
Marketing has not been high on the list of a
fund’s priorities and many want to maintain an air
of exclusivity that negates any need for mass advertising.
Until recently, most hedge fund managers thought Google
search results had no impact on their fundraising efforts. My
firm recently met with a senior executive at a leading hedge
fund who, just after using his iPad to pick a restaurant
online, said to a colleague, "Why should our firm care what
[expletive] Google says about us?"
Here’s why: Everyone uses Google as the first
step in researching a company or manager. A recent
Vanity Fair piece about SAC Capital reported that the
Securities and Exchange Commission, with innumerable resources
to aid their investigations, used Google to find a critical
link in their case against the firm. As they begin to embrace
the inevitability of the digital age, hedge fund managers and
private equity firms need to take their online reputation
seriously. When a potential investor Googles a fund and reads
about their poor performance without the benefit of other more
favorable legitimate content, the experience can tarnish the
investor’s opinion of that fund indefinitely.
According to a recent survey we conducted on the industry,
most funds have not taken steps to protect their online
reputations. Nearly 30% of the largest funds don’t
appear to have a prominent corporate website and, of those that
lack a corporate site, 40% have either Wikipedia (24%) or
Insider Monkey (16%), the 13F tracking site, as their top
Google search result. These are powerful sites that can
influence someone's first impression of a fund.
In addition, LinkedIn is the single most popular website
seen in search results for top hedge funds – appearing
at least once in the first page Google results for 80% of top
hedge funds, according to our survey. But most funds
don’t have a properly constructed LinkedIn
Many funds also have generic names that cause their search
results to be littered with sites (from real estate brokers to
lawn care specialists) that resemble the fund’s
name. These "resemblers" can cause confusion among potential
investors and others looking for information on a specific
fund. Some firms have resemblers for at least 50% of their
A growing number of hedge funds we work with have heard from
investors that they have a "Google problem."
One of the biggest concerns investors have when allocating
to hedge funds is so-called headline risk. Funds are run by
people who also lead private lives and, given the
public’s fascination with uber-wealthy
individuals; a hedge fund manager’s personal life
often becomes the story of the fund itself as portrayed in all
forms of media.
News sites love to post stories with eye-catching headlines
about the lives of hedge fund managers as celebrity fodder akin
to Hollywood stars. One manager we work with saw his
fund’s Google results dominated by negative
personal headlines about him as he went through a particularly
contentious divorce. Not surprisingly, investors in the fund
became nervous. It didn't help the firm's recruiting efforts
Managers of hedge funds need to understand they have a
public reputation whether they like it or not. Most managers
are involved in their communities, support charities, teach
courses at universities or pen opinion pieces about the
markets. Unfortunately these activities are rarely reflected
online because managers prefer to keep them private.
Transparency can have positive effects and it follows that
funds should make sure to refer to and promote existing sites
that focus on the principal’s business
achievements and philanthropic activity. They may also consider
creating new content that speaks to issues they care about.
But a fund’s reputation is not always about one
person. Many fund managers are approaching an age where
investors naturally worry about who will run the fund in the
future. More often than not, the candidate being groomed to
take over has almost no digital footprint – a problem
for investors who are already nervous about the transition.
Positioning the new manager as a thought-leader with a proven
track record is important for a smooth transition.
To raise the profile of the successor, the fund should
anticipate the type of information that stakeholders will be
searching for and consider creating and making discoverable
content that addresses these questions. This may include
working with a PR firm in order to be included in relevant news
articles, creating business profiles on relevant financial
websites, or working with a Wikipedia editor to ensure that
coverage in Wikipedia is accurate and complete. Recently a
large fund we work with was written about in a popular
financial publication’s "top hedge fund managers"
article. Virtually all of the sources and images used were
taken directly from their Wikipedia page. This article led to
subsequent profiles of the fund that helped create a positive
and informative first page of Google search results.
Poor performance is also something that generates headline
risk. Even one quarter of poor performance can generate nasty
headlines that show up high in search results. These headlines
tend to dominate the results when firms lack a corporate
website or fail to create a corporate profile on sites Google
favors, such as LinkedIn. This vacuum can result in opinionated
bloggers or discussion group participants having a
disproportionate voice in the online conversation about the
Big consumer brands and public companies are obsessed with
their online reputations for good reason. We're living in a new
digital age when one blogger or disgruntled client can shape
the image of a firm for years to come in the time it takes to
click a mouse. Taking control of your own online reputation is
the only way to protect it.
David Andrew Goldman is the chief strategy officer
Blocks, a technology and digital consulting firm
with a focus on online branding and reputation for financial
services companies and high net-worth individuals.