Hedge fund managers are keen to paint themselves as philanthropists rather than playboys. They’re no longer locusts swooping on companies, they’re investors with a conscience who can do good as well as donate millions to charity.
ARK, the annual hedge fund charity gala put on ice for the first time in ten years in 2013, has raised over £180m, while the glitzy Hedge Fund Cares events in the U.S allows managers to pledge money to charity on a big screen in front of their peers. Michael Hintze, CEO of hedge fund CQS, was even handed a knighthood this year for ‘services to art and philanthropy’, and the navel gazing at a hedge fund conference in Monaco this month was all about socially conscious investing.
It wasn’t always thus – for all the examples of charity work, some hedge fund managers still manage to fall into the old trap of sleaze and excess. Here’s a reminder.
Marc Leder, co-CEO of Sun Capital Partners, has been a tabloid newspaper’s wet dream over the past 12 months. Not only was his home the venue for a fundraiser that featured Mitt Romney’s famous “47% comment”, but he’s also said to have hosted some racy parties involving nude frolicking and some sex acts. Not only that, but he’s also fathered a love child with a woman he had an on-off affair with for a number of years.
Steven Cohen, owner of hedge fund SAC Capital Advisors, is said to be worth over $9.5bn according to the Bloomberg Billionaires Index, so shelling out a few hundred million for works of art is no big deal. In March, he paid $155m for Picasso’s ‘Le Rêve’, shortly after agreeing to pay $616m to the U.S government in order to settle accusations of insider trading. This is at least the second such purchase by Cohen, who paid $120m in 2012 for four bronze sculptures by Henri Matisse. He also bought Damien Hirst’s pickled shark for $12m, and in 2009 displayed an art collection worth $450m at Sotheby’s in New York.
When you have a personal fortune of £450m, as Crispin Odey, founder of hedge fund Odey Asset Management does, it’s easy to lose a sense of perspective. While most people in the UK (outside of London) would be looking to spend upwards of £100k on their first home, Odey decided to shell out £130k for a hen house. This is no ordinary coop, of course, but a neo-classical style palace carved out of grey sandstone that could happily house a family of four.
Sometimes, mainstream society simply doesn’t cater the needs of the uber-rich. Of course, you can buy your own island, but it inevitably comes under the jurisdiction of some pesky government. The solution, at least for Pay-Pal co-founder and hedge fund manager Peter Thiel, was to funnel $1.25m into a project building private floating islands in international waters, called the SeaSteading Institute, allowing “the next generation of pioneers” to form their own city-state. The first, available to at least 50 people, is expected to be ready by 2015.
Christopher Hansen, founder of Valiant Capital Management, is not the sort of hedge fund manager who likes to hog the limelight, but he stepped into the public glare with his attempted purchase of basketball team Sacramento Bees. This was not necessarily a vanity purchase, as the protests from fans expecting a predatory move to relocate the NBA team to Seattle demonstrated, but Hansen’s final bid was a hefty $625m. Ultimately, he failed, but has declined a refund of his $30m deposit suggesting that a legal case could be on the cards.
You’re no one in the hedge fund world if you can’t sail around in an extravagant super-yacht with an eccentric name. Raffaele Costa, a former Goldman Sachs banker turned hedge fund manager, reportedly dons a mask, leather coat and trousers and samurai sword, calling himself Captain Magic while sailing on his super-yacht ‘Sea Force One’. Dan Loeb, the founder of Third Point and one of the world’s richest hedge fund managers, recently paid around $50m for former Citigroup CEO Sandy Weill’s amazing 200-foot yacht. It’s important not to over-extend yourself though – Peter Hochfelder, owner of Braham Capital Management, ordered the construction of a second yacht, Trinity, before he sold his existing boat, Blind Date. He’s now stuck with both that cost him around $4m a year to maintain. Ray Dalio, founder of Bridgewater Associates, meanwhile, used his yacht for more creative purposes – capturing the elusive giant squid on video for the first time.
There’s no shortage of hedge fund managers with amazingly expensive properties – Loeb owns a $100m apartment in Manhattan, for example – but high-flying Deepak Narula, one of the most successful managers of recent years, has just bought the former New York apartment of Madonna. It was originally on the market for $23.5m, but Narula is believed to have paid under $20m for the six-bedroom 6000-square foot duplex.
OK, this is not an example of an over-zealous purchase, but it says something about the circles that hedge fund managers move in that Christopher O’Neill, a partner at Noster Capital, was able to woo Princess Madeleine of Sweden. The couple married earlier this month, but O’Neill decided to decline royal status in order to be able to retain his dual American and British citizenship, which means he’s not a prince. Nor does he have any plans to learn Swedish.