Hedge funds are estimated to account for close to half of the NYSE trading volume and research from Greenwich suggests they will continue to expand their presence in global financial markets. New research by Greenwich Associates indicates that U.S. companies should be fine-tuning their investor relations strategies to meet growing influence of hedge funds. Importantly, one of the findings show that U.S. institutional investors paid Wall Street nearly USD 1.75 bn last year in equity brokerage commissions specifically designated to compensate brokers for coordinating and facilitating face-to-face meetings between the institutions and corporate management teams at private gatherings or industry conferences.

While that figure represents about 35% of total U.S. institutional commission payments, hedge funds use about 42% of their commissions to compensate brokers for delivering meetings with company management teams. “Corporate IR professionals should be intimately familiar with what the booming business brokers have built selling access to company management teams,” said Greenwich Associates consultant Bill Bruno. “More specifically, IR professionals should be aware that the time of their top executives is a valuable asset that companies should be managing strategically and for their own benefit.” The report also said that the typical hedge fund analyst covered fewer industry groups (4.2 in 2007) than the average among buy-side analysts as a whole (5.1). However, hedge fund analysts cover 60% more companies than their Wall St. peers across the buy side, a whopping 87 companies on average in 2007—up from 75 the prior year—versus just 54 for the entire buy side.

 

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