Looking back at an Obama backlash and Bill Ackman’s early days at Pershing Square

October 12, 2011   Lawrence Delevingne


AR also revisits the quick growth of billion dollar plus hedge funds and the richest hedge fund managers in the country.

One year ago

»» Hedge fund managers began to sour on President Obama and the Democrats, with pull-backs from Dan Loeb of Third Point, Steve Mandel of Lone Pine Capital, Frank Brosens of Taconic Capital Advisors and others.

More followed suit by mid-2011. Managers like John Arnold of Centaurus Advisors, Jamie Dinan of York Capital Management and Ken Griffin of Citadel all raised significant sums for Obama in 2008 but no longer appeared on lists of the president’s current mega fundraisers, or so-called bundlers.

Today, mixed feelings remain. Some, like George Soros of Soros Fund Management and Dinakar Singh of TPG-Axon, are not opposed to Democratic proposals to raise taxes on the wealthy. But many other managers are frustrated and plan to vote Republican. The industry pick seemed to be New Jersey governor Chris Christie, who was urged to run by Loeb, Paul Singer of Elliott Management, Stanley Druckenmiller, formerly of Duquesne Capital Management, and David Tepper of Appaloosa Management. But Christie has (so far) decided not to run, and the same managers have mostly switched their allegiances to Mitt Romney.

»» The largest 217 American hedge fund firms gained $20 billion in the first half of 2010, for a total of $1.202 trillion. The top three firms—Bridgewater Associates, JPMorgan Asset Management and Paulson & Co.—maintained their dominance.

This year, the largest 241 American hedge fund firms gained $102 billion in the first half of 2011, for a total of $1.4 trillion. Bridgewater Associates was once again number one with $70.30 billion in hedge fund assets.

Five years ago

»» Bill Ackman of Pershing Square Capital Management sat down with Alpha Senior Contributing Editor Stephen Taub to discuss his recent investments and his days at Gotham. "We look for simple, predictable, free-cash-flow-generative businesses, where we can predict what they will look like in 10 to 20 years," said Ackman. "The value of anything is the present value of cash you can take out over time. If you can’t predict what a company is going to look like in five years, how can you figure out what it is worth? We’re very comfortable with stock market volatility but very uncomfortable with business volatility."

Today, Ackman remains involved as an activist investor in such companies as JCPenny and Citigroup. He manages $9.98 billion as of July 1 and his flagship Pershing Square fund (offshore) is down 8.25% through August. The firm declined to comment.

»» Hedge fund managers made much-improved showings in Forbes magazine's list of the 400 richest Americans, with Carl Icahn's estimated $9.7 billion net worth leading the way.

This year, hedge fund managers again figured prominently on the Forbes list. First among hedge fund managers was George Soros, who came in seventh overall at $22 billion. Other industry names on the 400 person list included John Paulson (17th at $15.5 billion), James Simons (30th at $10.6 billion) and Steve Cohen (35th at $8.3 billion).



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