Why Are Hedge Funds So Secretive?

The hedge fund industry basically started in 1949 with a guy named A.W. Jones and his ultra-high net worth friends. As it evolved in the ’50s and ‘60s and into the ‘70s, it was primarily for the ultra rich.  

Most of these guys are fairly reclusive guys that run money.  They’re more analytical and perhaps more introverted than the rest of us.  And so when you got into the ‘90s when the hedge fund industry really started to expand, I think the average public relations person said “Stay out of the press.  You don’t want to be anywhere near the press.  Why make yourself a target to people?” 

Good money managers have a healthy dose of paranoia in their personalities and cynicism and, some of them will say realism, but we know it’s cynicism.  And so what happens is they get a little scared of the press.  

When I started at Goldman Sachs in 1989, I can remember the head of the Public Relations Department at Goldman came in to the training class and said “Do not talk to the press.  If you talk to the press you will be fired.”  And I remember all of us having our knees knocking at that moment.  That was 23 short years ago, but the world has completely changed now.  

You may not believe you’re a public figure, but how many of you have a Facebook page?  How many of you have access to more than 1,000 friends on Facebook?  We’re all public figures whether we want to be or not.  And I feel that the industry is in a maturation phase and the more transparency, less opaqueness it has, the better for everybody.

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