Institutional Investor's Alpha Magazine - April 2008 - (Page 48)

Top 50 Moneymakers 38 Nathaniel Rothschild Atticus Capital $250 MILLION Nathaniel Rothschild, a scion of the storied banking family, neither invests nor trades at Atticus Capital. Rather, his role is to use his name to help Off the List, but Not Exactly Starving hough twice as many managers qualiﬁed for our list of the highest hedge fund earners in 2007, ﬁve who were among the top 25 in 2006 didn’t make the cut this time. Three of them lost money on at least one of their funds. T raise money and to serve as an Atticus emissary to targets of the ﬁrm’s activist activities. When Atticus wanted to get Barclays to drop its bid for Dutch bank ABN Amro, it was Rothschild who called Barclays chairman Marcus Agius to set up a meeting. Rothschild, a jet-setter who spends a fair amount of time in New York, evidently plays his part well: Barclays eventually was outbid by a Royal Bank of Scotland–led consortium, pleasing Atticus, a Barclays stakeholder that thought the U.K. bank was paying too much for ABN Amro. 41 Alan Howard Brevan Howard Asset Management $245 MILLION Edward Lampert ESL Investments Last year: $1.3 billion (No. 3) This year: Lost money Edward Lampert’s fortune is tied to Sears Holdings Corp., which accounts for about 60 percent of the $11.3 billion in ESL Investments’ equity portfolio. Last year shares of the fading retail giant fell nearly 40 percent. ESL’s second-largest holding, retailer AutoZone, eked out a slight gain. Shares of Lampert’s newest investment, banking behemoth Citigroup, were down about 40 percent from their summer peak. ESL ﬁnished the year down 27 percent. Bruce Kovner Caxton Associates Last year: $715 million (No. 6) This year: $100 million Bruce Kovner’s $9.6 billion Caxton Global Investments fund was up about 1 percent last year, a disappointing performance for the longtime macro manager. Kovner charges a 3 percent management fee, more than most of the top earners. He was up more than 6.5 percent at midyear, suffering all his losses in the third quarter, when Caxton’s global fund fell 5.6 percent as the credit markets tanked. Losses in equities exceeded gains in commodities, currencies and ﬁnancials. James Pallotta Tudor Investment Corp. Last year: $300 million (No. 17) This year: Lost money The streak is over for stock picker extraordinaire James Pallotta, who runs Tudor Investment Corp.’s $5.7 billion Raptor Global Fund. Raptor lost 7.8 percent in 2007, its ﬁrst down year since 1994. Pallotta wrote to investors in August that he got caught ﬂat-footed by market turbulence: “This would not have been the case had we understood fully the speed and ferocity with which events would unfold.” His long picks dropped; his short picks went up. Jeffrey Gendell Tontine Associates Last year: $270 million (No. 21) This year: $150 million You live by housing, you die by housing. For much of the decade, Jeffrey Gendell rode the market bull and shrewdly played the savingsand-loan consolidation. But last year a key Gendell fund, Tontine Financial Partners, plummeted by 58 percent, overshadowing a 43 percent return in the larger Tontine Capital Partners fund. “Global macro” remained Alan Howard’s mantra in 2007 at Londonbased Brevan Howard, which had $21 billion in assets under management at year-end, just ﬁve years after its founding. Howard raised $1.5 billion with the launch of BH Macro, the ﬁrst hedge fund to list on the London Stock Exchange. An estimated additional $250 million came in when he sold a 15 percent stake in the ﬁrm to Zurich-based reinsurance company Swiss Re. (The ﬁrst part of Brevan Howard’s name is an amalgamation using initials — B, R, V, N — from the names of four of Howard’s cofounders and former colleagues at Credit Suisse.) There are riches in public offerings, and the 44-year-old manager is now mulling a second, of a new $500 million hedge fund. It might not be a bad bet. Gains this year at Brevan Howard have already lifted assets by an additional $2 billion to $3 billion. 1994 and which now manages $33 billion in assets. The $245 million he made in 2007 includes only gains on his own capital in Och-Ziff funds and his cut of the management fees. Och-Ziff takes a conservative, diversiﬁed approach to investing — its ﬂagship OZ Master Fund has only about half the volatility of the Standard & Poor’s 500 index. Last year the ﬁrm had almost no exposure to credit. The OZ Master Fund was up 11.65 percent and has a 13.9 percent annualized return over the ﬁve years through 2007. After the IPO, Och, who began his career working for Robert Rubin in Goldman, Sachs & Co.’s famed arbitrage group, owned more than 148 million shares of Och-Ziff. In early April they were down about a third from their initial $32 price. 43 Thomas Steyer Farallon Capital Management $230 MILLION 41 Daniel Och Och-Ziff Capital Management Group $245 MILLION Thomas Steyer, 50, the founder and co–senior managing member of San Francisco–based Farallon Capital Management, has seen his company’s assets more than double in three years, to $36 billion. Last year Steyer, a deep value investor, delivered a 15 percent return; he also brought in Andrew Spokes as co–managing partner. Spokes had worked at Farallon from 1997 to 2005 before leaving to co-found London-based Noonday Global Management, an afﬁliate of Farallon that manages capital for institutional investors and high-net-worth individuals. Perhaps Steyer, a major fundraiser for Senator Hillary Clinton’s presidential bid, was freeing himself up for politics. He helped bankroll the defeat of a proposal last year that would have made California one of only three states to divide electoral votes by congressional district, a change sought by Republicans. Barry Rosenstein Jana Partners Last year: $250 million (No. 22) This year: $170 million Last year was tough for Barry Rosenstein, as it was for many activist investors. His main hedge fund, Jana Partners, rose just 6.4 percent. Two newer funds fared better: Jana Piranha Master Fund climbed 12.2 percent, and one-year-old Jana Nirvana Offshore returned more than 17 percent. Every aspiring manager-gone-public would like to be Daniel Och. At 47, he owns $2.8 billion in Och-Ziff Capital Management Group shares and stands to eventually reap a further $1.5 billion from the November IPO of the New York ﬁrm, which he founded in 44 Lee Ainslie III Maverick Capital $225 MILLION Lee Ainslie III, 43, the son of the headmaster of an Episcopal school, was recruited by Tiger Management founder 48 • INSTITUTIONAL INVESTOR’S ALPHA • APRIL 2008

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - April 2008

Institutional Investor's Alpha Magazine - April 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Here to Eternity The Good Guys: Voice of Hope Cover Story: The Kings of Cash Where the Money Is Into the Light Interview: Proceeding with Caution Strategies: A Convenient Truth Alpha Bytes: Village Voice Unhedged: Commentary: No Time for Complacency

Institutional Investor's Alpha Magazine - April 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.