The good and bad of hedge fund coverage

TheDeal.com executive editor Yvette Kantrow writes about how hedge funds have been portrayed positively — and negatively — in the business media recently.

Kantrow wrote, “For writers of ‘Law & Order,’ a wealthy hedge fund manager who is a greedy, scheming and cowardly creep isn’t hard to envision. Let’s face it — for most people, if they think about these things at all, the hedge fund crowd and its kissing cousin, the private equity gang, are a bunch of ethically-challenged barbarians who fire workers and avoid taxes. Is murder such a stretch?

“On the other hand, a recent streak of ethical transgressions by members of this set hasn’t served to correct this, um, negative perception. Take the media lemonade former hedge funders managed to turn into lemons a few weeks ago after The New York Times ran a glowing profile of their new venture, GiveWell, a charity that helps donors evaluate other charities. The Times praises how the pair, Holden Karnofsky and Elie Hassenfeld, left lucrative hedge fund jobs to found GiveWell for salaries of $65,000 a year. The Dec. 20 story was heartwarming enough to get picked up by New York magazine’s Daily Intel blog under the headline ‘Hedge-funders use their skills for good, not evil.’ That alone tells you where hedgies rank on the respect scale.

“But the praise may have been premature. A subsequent post on the Intel blog on Jan. 2 — ‘Hedge-funders use their skills for evil, not good’ — reported that Karnofsky had been busted by MetaFilter for setting up an alias and posting positive musings about GiveWell on message boards. Posters to MetaFilter went nuts, noting the irony that an endeavor purporting to bring transparency and honesty to philanthropies was itself engaging in opacity and dishonesty. Karnofsky soon supplied a mea culpa: ‘It was a lapse in judgment. It was terrible. I really hope that you can understand the difference between this mistake and running a scam.’

“OK, nobody ended up dead — this is not ‘L&O.’ But with explanations like that, it’s no wonder hedgies are believable villains. If they’re fibbing online, what else are they up to? Where do they draw the line between ‘mistake’ and ‘scam'”?

Read more here.Â