Michael Steinhardt

From Wikipedia, the free encyclopedia

Michael Steinhardt

Born December 7, 1940 (1940-12-07) (age 67)
Flag of New York Brooklyn, New York
Occupation Hedge fund manager

Michael H. Steinhardt (born December 7, 1940(1940-12-07) in Brooklyn, New York) is an American businessman and was one of the first prominent hedge fund managers. He founded Steinhardt, Fine, Berkowitz & Co., a hedge fund, in 1967.

Contents

[edit] 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 he and his partners starting their eponymous hedge fund during the summer of 1967, Steinhardt was an analyst at Loeb, Rhodes & Co. (now part of Lehman Brothers Holdings, Inc., following a chain of mergers), where he followed the conglomerate industry, which included companies such as "Automatic" Sprinkler (now defunct), City Investing (likewise), and Gulf & Western (stronger than ever, as 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 Steinhardt at the time, mentioned Colorado Milling to her father, who invested in the company, making a substantial profit, part of which were used to buy his daughter 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 $70 million in fines as part of settling the case with the Securities and Exchange Commission and Department of Justice. His firm made $600 million on the Treasury positions.[1] Following a down 1994, Steinhardt Partners enjoyed an excellent 1995, with performance in line with its historical record. Going out on a high note, the hedge fund closed shop at the end of 1995.

In 2004, Steinhardt came out of retirement to work for Index Development Partners, Inc.,[2] 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 August, 2007, WisdomTree had $4 billion under management, and was growing by 10% a month. [1] During the fall of 2007 and early winter of 2007-08, Wisdom Tree's growth stagnated, as the stock market, especially the financial sector in which Wisdom Tree's dividend-based funds are overweighted, tanked. However, in recent months, as the Wisdom Tree funds tended to outperform their "bogies," asset growth resumed its earlier pace. Steinhardt is also chairman of the board at the The Steinhardt Foundation for Jewish life (formerly Jewish Life Network) and Taglit-Birthright Israel.

[edit] Hobbies and philanthropy

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]

Steinhardt has been an active philanthropist, donating over $125 million to Jewish causes. He and Charles Bronfman founded Birthright Israel, which has to date sent over 180,000 young Jews aged 18-26 on a 10-day trip to Israel, absolutely free.

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.[3]

The Steinhardt School of Culture, Education and Human Development at New York University bears his name in recognition of two $10 million donations.[4]

[edit] 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 "Red" Steinhardt. "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. The book also suggests that Steinhardt's education at the Wharton School may have been paid for with illicit funds. [5]

[edit] 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.[6] While Steinhardt may have been a Friend of Bill, he apparently was no Friend of Hill. 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 20th, 2001, Clinton's last day in office, Rich was in fact pardoned.)[7] Steinhardt was an early promoter of the possible presidential candidacy of Michael Bloomberg in 2008.[8]

[edit] References

  1. ^ Michael Steinhardt's Voyage Around His Father - Forbes.com
  2. ^ http://www.wisdomtreeinvestments.com/press/pdf/IDP-Completes-$9-Million-Financing.pdf
  3. ^ News from Zoos: March and April 2002
  4. ^ Steinhardts make historic gift to NYU's School of Education
  5. ^ Lenzner, Robert, "Michael Steinhardt's Voyage Around His Father," Forbes, November 8, 2001
  6. ^ McCarthy, Daniel, "Most Favored Democracy," American Conservative, November 17, 2003
  7. ^ Vickers, Marcia, "The Rich Boys," Business Week, July 18, 2005
  8. ^ Heilemann, John, "His American Dream," New York Magazine, December 4, 2006.

[edit] Further reading

[edit] External links