Seeking the intellectual return

A hedge-fund honcho reinvents himself as a film financier

Stephen Hays '83 comes from a family of entrepreneurs. One brother is a professional jazz pianist, another runs music festivals. His sister owns and operates a catering business and restaurant. As he says, "None have worked a single day for 'the man.'"

So when Hays found himself co-managing a highly successful New York-based hedge fund in 2002, he felt a pang of discomfort. He wasn't just working for "the man." He was "the man."

Further, he says, his proximity to an establishment that was "peddling in deceit and waging war for oil" became too much for him. "Many people, in reaction to 9/11, sought to revisit their priorities; mine was a product of this country's response to that tragedy."

In 2004, the Kenyon history major with a master's degree in accounting and finance from the London School of Economics did something that many people fantasize about but very few actually undertake: he reinvented himself. Using the skills he'd honed in his eighteen years as a specialist in risk arbitrage and distressed investing, and as the co-founder of Seneca Capital, Hays created a company that lends money to independent film producers. He called it 120dB Films, 120 decibels being the sound pressure level at which humans begin to feel pain.

The company lends exclusively on a "last-in, first-out" basis, offering financing to moviemakers who find themselves strapped for funds. Hays's firm has financed pictures as diverse as the immigrant drama Sweetland, with Ned Beatty; the 2005 Sundance entry Loggerheads; the snowboard documentary Snow Blind; and David Mamet's Edmond, with William Macy and Mena Suvari.

Hays had always had an interest in film. He made "ridiculous" Super 8 shorts in junior high school, he says, and during his last two years at Kenyon he ran the photo department for Reveille, the yearbook, and for the Collegian. In the late 1990s, he added to his list of "unwatchable" short films and also invested some money (still last-in, first-out) in a couple of "low-budget horror pictures--there seems to be an insatiable appetite for them."

But the jump from Wall Street to film did induce a little "culture shock," he says. Independent film producers are "a curious bunch," according to Hays. "Few seem to view themselves as fiduciaries, persons entrusted with other people's money, which they clearly are." As a result, he and his partner often find themselves acting not just as lenders but also as executive producers, dissecting a project's capital structure, helping to figure out other potential sources of funds, and assisting in the sales and marketing strategies.

It's gratifying work. Many worthwhile films go unmade for want of such expertise. "Films with messages that we most need to hear tend to be more challenging than others to raise money for, not to mention finding the distribution and releases they might deserve," says Hays. "A well-known example is Michael Moore and Fahrenheit 9/11. Disney didn't want to be associated with that project," and Moore was forced to find alternative ways to get the picture out.

Film is "an amazing vehicle for raising political and social consciousness," says Hays. Of course, he isn't simply giving his money away; he's looking for a compelling risk-adjusted rate of return on his investments. "We are, after all, financiers," he says. But he's seeking an intellectual and artistic return as well. "If there's something that maybe is a little less certain commercially but has a worthy message, will that influence me at the margin to lend them money? Yes."

Hays says that the willingness to take a "different" approach has served him well in the business world. Indeed, his own rebelliousness may have blazed the way for many mavericks, filmmakers among them. His 120dB Films has become so successful that it is branching out into other forms of film financing, including finishing funds, prints and advertising campaigns, and underwriting film and library acquisitions. As Hays told the publication Screen Financing, "We want to be seen as a one-stop firm for all of a producer's financing needs, streamlining the process and ultimately speeding up closings."

And the individualistic choices will continue. "We definitely have a positive bias toward projects that are insightful," says Hays, "but we also help finance zombie westerns, so go figure."

-- Traci Vogel

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