Friday, May 10, 2013

Hedge Fund Seduction

Hedge Fund Seduction

The hedge fund industry is gathered in Las Vegas for the annual Skybridge Alternative (SALT) conference.  Skybridge is a sizable hedge fund of fund manager, and its Managing Director, Anthony Scaramucci, organized the gathering, one of the premiere events in the money management industry.  In addition to a pantheon of hedge fund managers, the conference attracts all sorts of business leaders and former politicians. Attendees are treated to the wisdom and insight of Mike Krzyzewski, Ehud Barack, and Al Pacino.[1]   The sessions, frankly, are nothing special.  Rather, they are the well-worn topics on most every conference agenda: everything from investment strategies to asset allocation.[2]  Much of this ground was covered last week at the Milliken Institute’s Global 2013 Global Conference.  Entertainment makes SALT a special event.   As The New York Times reports:

Guests feasted on chile-infused Kobe beef tacos while tossing back tequila shots passed around by skimpily clad waitresses. Showgirls danced on podiums. Men lined up at the cigar station, where a man was making freshly rolled Dominican stogies.[3]

SALT is a tremendous opportunity for the hedge fund industry to mingle with prospective clients, known as delegates.[4]  For three days there will be high-minded conversations, a concert by the band Train, and free-flowing alcohol.  By the end of the conference, the hedge fund industry will have a lot of new friends and prospective clients.    


There’s absolutely nothing wrong with this conference or similar events held to attract prospective equity, fixed income, real estate, or private equity investors as long as we’re clear about their purpose. The attendees think they are obtaining keen insights from elite money managers.  No manager in his right mind would give away valuable information to a gathering of investors and their competitors with the media in attendance.  No, these gatherings demonstrate that money management’s greatest capability is marketing.   I’m not sure any industry is better at seducing their clients.    

The problem, of course, is that the real clients don’t get to attend these events.   The attendees are almost all agents representing someone else’s money.  As my regular readers know, I talk about fees over and over again.  Well, this conference is pretty much underwritten by those fees.  The profits earned by Skybridge and all its conference sponsors make it easy to throw this bash.

It seems axiomatic that professional investing is about investing.  It’s not.  Professional investing is really about luring clients.  What better place than Las Vegas to conduct a bit of seduction.


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