02/19/2014

Balyasny Tests JOBS Act With Magazine Ad

Balyasny Asset Management appears to be the first major hedge fund operator to advertise since the JOBS Act took effect last year.

The Chicago firm, which manages $4.3 billion, ran a half-page ad in the Feb. 3 issue of Pensions & Investments showing skiers and snowboarders attacking a snow-covered mountain. The tag: “Performing In All Conditions.” The kicker: “Providing Strong Risk Management & Absolute Returns Since 2001.”

Since the SEC implemented the JOBS Act last September, there’s been much debate about whether hedge fund managers would take advantage of a provision that lifts an age-old advertising ban on private funds. In December, a small California shop called TopTurn Capital tested the waters by posting a video ad on its website featuring a professional surfer as pitchman.

But until now, the thinking has been that most managers would ignore the JOBS Act because of the regulatory hurdles that must be cleared. They include taking steps to ensure clients are accredited investors. The SEC eventually is expected to adopt additional rules requiring managers to submit ads to the regulator for prior approval.

Colin Lancaster, a senior managing director at Balyasny, said that in the wake of the JOBS Act it’s fair game to take out ads that lift the firm’s profile among institutional investors — Pensions & Investments’ core readership. But until the SEC further clarifies the rules, it may be risky to advertise specific investment products or tout returns the way mutual fund managers do.

“Some of the larger allocators are looking for established brands to invest in,” Lancaster said, explaining Balyasny’s rationale. “To continue to improve our brand profile can be helpful.”

Other large managers, including Bridgewater Associates and Pershing Square Capital, have turned up in videos on YouTube. While not specifically advertising their services, the YouTube appearances certainly provide wide exposure. That’s something most managers would have avoided prior to the JOBS Act.

In Balyasny’s case, the magazine ad coincides with the firm’s decision to reopen its two main hedge funds to fresh capital last month. The vehicle immediately took in some $500 million of new money before the ad campaign began.

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