- Michael Steinhardt
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Michael Steinhardt Born December 7, 1940
Brooklyn, New York, U.S.Occupation Hedge fund manager Michael H. Steinhardt (born December 7, 1940) is an American investor and philanthropist active in Jewish causes. He was one of the first prominent hedge fund managers, and is a graduate of the Wharton School of the University of Pennsylvania. He founded Steinhardt, Fine, Berkowitz & Co., a hedge fund, in 1967. He is "a legend in the story of hedge funds, partly because of his success as a trader but also because of his personality."[1]
Contents
Career in investing
Steinhardt averaged an annualized return for his clients of 24.5%, after a 1% management fee and a "performance fee" of 15% (early in his career, later 20%) of all annual gains, realized and unrealized, nearly triple the annualized performance of the S&P 500 Index over the same timeframe.
Prior to Steinhardt's and his partners' starting their eponymous hedge fund during the summer of 1967, Steinhardt was an analyst at Loeb, Rhoades & Co., later part of Citigroup, following a convoluted chain of mergers and spinoffs. At Loeb Rhodes, Steinhardt followed the conglomerate industry, which included companies such as Automatic Sprinkler (now defunct), City Investing (also defunct), and the best-known conglomerate of its day, Gulf & Western (now part of Viacom and Viacom's spinoff CBS). Again, according to his autobiography, he met his future wife in a car pool he organized in early 1967. During the course of the drive to downtown NYC, he mentioned the name of a company, Colorado Milling, a leading operator of grain elevators. Colorado Milling was acquired in 1968 by Great Western Sugar, a beet sugar refiner turned conglomerate, which had previously acquired Shakey's, a major pizza chain. The merged company was renamed Great Western United. The future Mrs. Steinhardt, who didn't know Michael Steinhardt at the time, mentioned Colorado Milling to her father, who invested in the company, making a substantial profit, part of which was used to buy his daughter—the future Mrs. Michael Steinhardt—her first fur coat.
After decades of successfully managing the fund, Steinhardt and his firm were investigated for allegedly trying to manipulate the short-term Treasury Note market in the early 1990s. He personally paid 75% of a total fine of $70 million as part of settlement with the U.S. Securities and Exchange Commission and Department of Justice. His firm made $600 million on the Treasury positions.[2] In "No Bull," Steinhardt said he did nothing wrong, but merely settled the case in order to "move on." Following a negative performance in his hedge fund in 1994, Steinhardt Partners enjoyed an excellent 1995, with performance in line with its historical record. The hedge fund closed and distributed all monies to its limited partners at the end of 1995, leaving Steinhardt himself very wealthy and very liquid.
In 2004, Steinhardt came out of retirement to work for Index Development Partners, Inc.,[3] now known as WisdomTree Investments. He is chairman of WisdomTree, which offers dividend and earnings-based index funds rather than traditional index funds based on market capitalization. As of April, 2011, WisdomTree had $13.5 billion under management, including over $11 billion in ETFs, and is growing by 10% a month.[4] During the fall of 2007 and 2008, Wisdom Tree's growth stagnated, as the stock market, especially the financial sector, in which Wisdom Tree's dividend-based funds are overweighted, tanked, as did Wisdomtree's stock. However, in recent months, as the Wisdom Tree funds tended to outperform their "bogies," asset growth resumed its earlier pace and its stock price appreciated accordingly. In 2010, Steinhardt was hired by IDT Corporation to serve as Chairman of the Board of Israel Energy Initiatives Ltd (IEI), Genie’s Israel-based alternative energy affiliate.
Art collection
Steinhardt is an art collector, especially of antiquities. A special exhibition, "Ancient Art of the Cyclades," held at the Katonah Museum of Art included some pieces owned by him.[citation needed] He also sits on the American advisory board of Christie's, the art & antiques auction house.[5]
Philanthropy
Steinhardt has been an active philanthropist, donating over $125 million to Jewish causes. He and Charles Bronfman founded Taglit-Birthright Israel, which has to date sent over 220,000 young Jews aged 18–26 on a 10-day trip to Israel, absolutely free. In his autobiography, he identifies himself as an atheist who nonetheless strongly supports cultural Jewish identity.
In the 1990s, Steinhardt gave Steeple Jason Island and Grand Jason Island in the Falkland archipelago to the Wildlife Conservation Society (WCS), along with US$425,000, and a guarantee to name the conservation statement after himself and his wife.[6]
The Steinhardt School of Culture, Education and Human Development at New York University bears his name in recognition of two $10 million donations.[7]
Steinhardt is also chairman of the board at The Steinhardt Foundation for Jewish life (formerly Jewish Life Network) and Taglit-Birthright Israel, He also makes public appearances, speaking with young Jewish kid through organizations such as Ezra USA. Ezra USA is the largest youth movement for Russian-speaking Jews in the US and RAJE(Russian American Jewish Experience).
No Bull
In 2001, Steinhardt published an autobiography: "No Bull: My Life in and out of Markets". In this book, he addressed for the first time the question of his father, Sol Frank Steinhardt, who also went by the moniker "Red McGee." "Red" Steinhardt was convicted in 1958 on two counts of buying and selling stolen jewelry, and was sentenced to serve two 5-to-10 year terms, to run consecutively, in the New York State prison system. (He did most of his time at Dannemora, a prison in upstate NY near the Canadian border, but had his sentence reduced to time served after two years due to allegations of prosecutorial misconduct.) Regarded by D.A. Frank Hogan as the number one jewelry fence in New York, "Red," according to No Bull, was an associate of noted underworld figures such as Meyer Lansky, Vincent "Jimmy Blue Eyes" Alo (incorrectly named "Aiello" in No Bull), and Albert Anastasia (No Bull wrongly refers to him as "Joey".) In No Bull, Steinhardt describes how his father bankrolled his early forays into the stock market by giving him envelopes stuffed with $10,000 in cash and sometimes much more than that. The book also suggests that Steinhardt's education at the Wharton School may have been paid for with illicit funds.[8]
Political activism
Steinhardt is active in political circles ranging from centrist Democratic to neo-conservative, having been a past chairman of the Democratic Leadership Council and a board member of the Foundation for the Defense of Democracies, to which he donated $250,000 in 2002.[9] According to Newsmeat.com, a tracker of publicly-available campaign contributions, in the 2000 New York senatorial primary, he donated $1,000 (then the maximum allowable under law) to Republican Rudy Giuliani. When Mayor Giuliani dropped out of the race, Steinhardt contributed an equal amount to Giuliani's successor, Rick Lazio. Steinhardt also gave $1,000 to Lazio in the general election.
In 2001, Steinhardt, along with several other investors including Conrad Black, founded the New York Sun, a niche New York City broadsheet best known for its unflinching pro-Israel support and generally (but not invariably) neo-conservative outlook. Steinhardt wrote a letter to President Clinton advocating the pardon of Marc Rich, calling him "my friend...who has been punished enough" (on January 20, 2001, Clinton's last day in office, Rich was in fact pardoned.)[10] Steinhardt was an early promoter of the possible presidential candidacy of Michael Bloomberg in 2008.[11]
References
- ^ Sebastian Mallaby (2010). More Money Than God, pg.41
- ^ "Michael Steinhardt's Voyage Around His Father - Forbes.com". Forbes. November 8, 2001. http://www.forbes.com/2001/11/08/1108steinhardt.html.
- ^ http://www.wisdomtreeinvestments.com/press/pdf/IDP-Completes-$9-Million-Financing.pdf
- ^ www.wisdomtreeinvestments.com
- ^ http://www.christies.com/about/company/advisory-board.aspx
- ^ News from Zoos: March and April 2002
- ^ Steinhardts make historic gift to NYU's School of Education
- ^ Lenzner, Robert, "Michael Steinhardt's Voyage Around His Father," Forbes, November 8, 2001
- ^ McCarthy, Daniel, "Most Favored Democracy," American Conservative, November 17, 2003
- ^ Vickers, Marcia, "The Rich Boys," Business Week, July 18, 2005
- ^ Heilemann, John, "His American Dream," New York Magazine, December 4, 2006.
Further reading
- Schwager, Jack D. (1993). Market Wizards: Interviews with Top Traders. 27 pages: Collins; Reissue edition. ISBN 0-88730-610-1.
- Steinhardt, Michael (2001). No Bull: My Life In and Out of Markets. Wiley. ISBN 0-471-66046-9.
External links
Categories:- 1940 births
- Living people
- People from Brooklyn
- American Jews
- Jewish atheists
- American atheists
- Hedge fund managers
- Zionists
- American philanthropists
- American money managers
- New York University people
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