How Harvest saved Brencourt’s Hedge Fund from Collapse

In 2012, I was the head trader for Brencourt, a credit opportunity fund that focused on event-driven situations. We made trades across the capital structure, and often hedged ourselves in order to limit the downside in case we were wrong, but still achieve 70-100% of the upside if we were right.  We were very good at what we did, and enjoyed thinking about risk in a different way than most credit funds.  

Brencourt had hundreds of examples that highlighted our success, and more importantly, our differentiated thought process that lead to the unique setup of these investments. Our small pool of investors, and even a handful of interested potential investors, really loved the Brencourt team and believed we were offering something different in a sea of homogenous funds. Unfortunately, no one else knew who we were.  Databases weren’t helping us get discovered. Cap intro teams weren’t focused on us.  There was no way to get our message out there in a scalable fashion.  At the end of the day, Brencourt simply wasn't raising enough money to stay in business.  We were about to close our doors....

… But then a member of the fund stumbled upon Harvest Exchange; a platform where Brencourt could brand itself and share the nuances that made Brencourt what it is. Initial postings on the Harvest platform yielded minimal results, if any, however, with our backs to the wall and limited alternative options, we trusted the Harvest team’s advice and kept posting content that exemplified Brencourt’s unique approach to investing, our thought processes and our vision.  Investors started to take notice.

Over the next few weeks and months we saw increases in traffic to our posts and our Harvest profile, and with the analytics dashboard provided free on the Harvest platform, we were able to see how each piece of content we published resonated with different investor audiences. Our brand was growing. Everything was going great, and we knew sophisticated and institutional investors were frequently reading what we wrote. ;So we decided to up the ante and try out Investor Connect - Harvest’s lead generation service that helped us identify potential prospects out of the thousands of investors who were reading our content.  People were coming to us, rather than us chasing people down.  We enjoyed watching our content resonate with so many readers on Harvest, but more importantly, we could finally see a return on the time and energy we spent writing and producing the content. With Investor Connect, Brencourt finally achieved a tangible ROI on our efforts, and could focus our marketing efforts on potential investors who connected with us via reverse inquiry.

With the connections we made on Harvest, we were able to raise money and build a long-lasting brand for our fund… ultimately saving Brencourt from the fate of being another victim of an overcrowded, undifferentiated industry.

Or rather, that’s what I wish would have happened. Unfortunately Harvest wasn't around in 2012 as Brencourt was struggling to raise money, and ultimately we had to shut our doors.

We couldn’t raise enough money to stay solvent simply because not enough people saw what made Brencourt different. What most hedge fund investors saw was the output in a database… our returns. What investors needed to see was the inputs… our thought process and risk management.

Returns tend to fluctuate and revert to the mean, making differentiation difficult. Returns are backwards looking.

Thought process and risk management leads to future returns. Thought Process is forward looking.

I left my hedge fund in 2013 to help create Harvest Exchange. The reason was simple. If Harvest Exchange had been around during Brencourt’s time, I honestly believe Brencourt would still be in business. Using Harvest Exchange, Brencourt could have consistently and seamlessly expressed the qualitative metrics that made our team and our fund different, giving more institutional investors a chance to discover us and invest with us. Of course all of this is speculation, and it’s certainly possible that more exposure wouldn’t have necessarily led to immediate investments in our fund. But more exposure certainly would have helped new investors understand what Brencourt stood for.  And really, isn’t that what matters?