Investor Communications In The Time Of Covid-19 (And Beyond)
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Sheltering-in-place has forced the alternative asset management industry online. The first wave of internal communications gave way to investor and prospect initiatives to such an extent that we’re now privy to four-hour Zoom due diligence meetings and fully virtual annual meetings, both almost unheard of before.
It was great to catch up with Andrew Saunders, founder of Castle Hill Capital Partners, for some quick insights about how fund client and prospect communications are evolving in the time of COVID-19.
Castle Hill is a capital raising platform providing brokerage solutions, strategic capital introduction support, and placement agent services. Castle Hill works in partnership with our clients and implements a structured sales and marketing process that combines strategic marketing counsel with specific, relevant institutional investor introductions for a targeted cohort of highly differentiated alternative investment managers and strategies.
Vailakis: Thank you for sharing your observations with Alternatives Watch readers, Andrew.
When we go back to the office, will we continue using Zoom/Slack/Microsoft Teams/Google Hangouts etc.? What have we learned from the forced embrace of video conference technology over the last two months?
Saunders: I think so. We’ve learned that for many tasks that were heretofore assumed to be in person, these technologies work. It’s remarkable how much we can get done and how much more effective video calls are compared to straight conference calls. Sharing screens and seeing human faces are all hugely important when attempting to move the ball down the field with a potential allocator.
Vailakis: How has industry use of video call technology evolved in these few months?
Saunders: A certain degree of informality was permitted in the early stages, however, we’re now at phase 2 and every professional should have the following:
A suitable backdrop — This means no open bathroom doors, no weird art. Children’s drawings are good. Books are good. Towels hanging on the backs of doors are bad.
Appropriate lighting — Front lighting yes, back lighting no. If there is a window in the room, face it, don’t have your back to it.
A collared shirt — This isn’t as much of an issue for women who generally have their act together. However, gentlemen, while a beard is fine, please pair that with a shower and a collared shirt. I’ve heard of update Zoom calls where the manager looked like he just rolled out of bed.
Vailakis: Beyond the standard live conference call meeting, how else are you seeing video used now and in the future?
Saunders: Now that managers are getting used to seeing themselves on screen, I’ve started to hear that more are recording videos or audio conversations around the monthly returns. There are a number of different formats, however, ideally, these AV updates should precede the monthly letter and be issued t+1 or t+2 after month-end.
I prefer video…look into the camera and share your impressions of the month. But speaking into a camera is hard for many, so it can also be a conversation between Investor Relations and an Investment Professional that is recorded and posted. ~5-10 minutes in length. Each month, offer immediate impressions of performance: winners, losers, insight on the market/sector, firm updates (hires, returning to office, etc.) and then close with “we will expound on these ideas in our monthly/quarterly letter”.
Looking ahead — we see managers thinking creatively to allow investors into “the room where it happened.” Options in this regard include investment committee meetings/presentations and risk management meetings. I wouldn’t suggest these be posted live, however, they can be recorded, reviewed by compliance and shared at the discretion of the GP with strict rules of access. Select video presentations/conversations may be shared with investors or prospects via password-protected data room offering investors and prospects an efficient way to virtually participate/eavesdrop on the inner workings of the firm to help them further their diligence efforts.
The most creative and forward-thinking funds are doing this already. Outside of our industry, these tools are standard. Nowhere else does a 10-page annual letter or 20-page deck make up the crux of the marketing effort. Wherever possible consider how to incorporate technology tools into your initiatives.
Vailakis: As fund due diligence does involve a multi-document delivery with a lot of detail, how do you advise managers approach presentations vs. ‘the heavy data dump’?
Saunders: Bifurcate presentations. There are documents that will be examined and there will be presentations that are given via webinar. These are two separate communications initiatives that drive toward two separate goals. One is sharing data, the other is telling a story.
If you’re giving a presentation via webinar/or sharing slides, adhere to the adage — 1 idea, 1 slide. Let the idea sit there on the page and don’t lard up the slide with too much extraneous detail.
Vailakis: Any final thoughts around communications innovation and cultural change in the time of COVID-19?
Saunders: Think outside the firm or yourself.
Are you volunteering, are you running more, have you picked up bread making? Where are your colleagues based? What are their personal situations? This change in routine offers an opportunity to personalize your firm, introduce your prospects and investors to the team, and demonstrate the depth and value of your bench.
A restaurant I frequented in pre-COVID days sends me a biweekly beautifully curated newsletter with updates, recipes, and a profile of someone in the front of the house – e.g. hostess, bartender, waiter – and someone in the back of the house – e.g. chef, sous chef, dishwasher. They are simple, they are poignant, and they continue to foster a bond between the restaurant and its customers until we are able to dine together again.
Pursuit of alpha is a people-driven business. We’re all human beings going through an extreme situation together; it’s okay to let that show a little.
Nancy Vailakis is a 16 year veteran of the alternative asset management industry, having held prior investor relations roles at Cerberus Capital Management and BlueMountain Capital Management. Vailakis holds an MBA in Finance from the NYU Stern School of Business.