Daniel Barach with his sandwich board.
Photo: Rob Copeland
Occupy Wall Street has picked up an unlikely recruit with
close ties to the much-vilified top 1%.
Daniel J. Barach, former portfolio manager of a $157 million
hedge fund, has taken the movement's cause to the streets of
Greenwich, Conn., the home to such funds as
AQR Capital Management and
Tudor Investment Corp. This month, Barach has protested by
walking along the posh shopping strip Greenwich Avenue clad in
a sandwich board that pleads "Stop Tax Breaks for Hedge Fund
Managers" in bold red type to protest "economic justice in
Barach held forth on what he thinks is inequity in the way
hedge fund manager bonuses are taxed. His main complaint:
the tax advantage of having a huge portion of managers'
incomes treated as capital gains and thereby subject to
dramatically lower levies than those on ordinary income.
The Harvard Business School graduate is no stranger to the
hedge fund industry. He managed $157 million MLT Capital for
more than a decade until 2009. According to his
LinkedIn profile, Barach's "nine year audited track record"
at MLT "averaged 21.08% gross" from 1999 to 2007. He closed the
fund in 2008 amid major redemptions as performance soured.
Barach declined to discuss his 2008 performance. In a biography
provided for his self-published book, "
How to Lose Friends and Irritate People," the back cover of
which features a full-page photo of someone giving readers the
middle finger, Barach described his strategy as "very
long-biased and relatively un-levered."
Barach spoke with AR's Rob Copeland about his new
part-time gig as a one-man rally:
AR: You spent many years managing
a hedge fund. Why protest now?
Daniel J. Barach: The carried interest law
has bothered me for a long time. Recently I've been inspired by
the Occupy Wall Street movement, though not everything that was
coming out of it. Also, I'm inspired by the fact that we have a
huge deficit and a huge debt. The patriotic thing to do is try
to reduce that deficit by ending the loophole. I think that if
educated on the issue, 80% of the American public would
AR: What made you choose to
demonstrate on Greenwich Avenue?
Barach: Greenwich has been formally
recognized as the hedge fund capital of the world but I never
saw anyone protesting there. I went once and talked to a police
officer and he said he didn't understand why no one from Occupy
Wall Street was in Greenwich. I asked him is it legal to
protest-to walk up and down the sidewalk-and he said
absolutely. In fact, he directed me where to park.
AR: What sort of pushback did you
get from the populace?
Barach: I got many reactions: More than 25,
and less than 100. I got a lot of people who said, "You have to
watch out walking around here with that." But almost everyone
was extremely positive and supportive of the idea of stopping
tax breaks for hedge fund managers.
One person who identified himself as a hedge fund manager
said something negative and condescending as he walked away. I
invited him to walk back and engage. His arguments didn't make
much sense to me and after five to ten minutes of talking he
said he had to go, leaving in a huff.
||Daniel Barach appears to be following the advice
he dispensed in his recently self-published
AR: Don't you think it's a bit
hypocritical to protest tax policy that you yourself profited
from for many years?
Barach: It's not about me. Just because I
did not always choose to wear a sandwich board and march along
Greenwich Avenue does not condemn me as an evil person.
AR: Was it unfair for you to
receive those tax breaks?
Barach: Yes. It's unfair legislation. I
don't fault hedge fund managers. I fault our elected officials
for allowing this.
AR: Have you gotten any more
reaction since taking up this cause?
Barach: My family is not supportive of this
at all. Right now I'm a
portfolio management consultant and they feel that I will
lose clients because what I'm proposing is not in my clients'
economic interests. They also feel like should I try to get a
job for a hedge fund or an asset manager, it will make me toxic
or somehow hurt my ability to get a job with a fund.
AR: But you aren't worried?
Barach: I would hope that [a fund] would
focus on my audited track record from 1999-2007, and I would
hope they would actually look for people that were willing to
take unpopular stances.
Interview has been condensed and edited.
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