Michael Steinhardt

Michael H. Steinhardt (born December 7, 1940) is an American investor, hedge fund manager, and philanthropist. In 1967, he founded a hedge fund, Steinhardt Partners, that averaged an annualized return for its clients of 24.5% from 1967 to 1995.[2] His fund lost 1/3 of its value in the 1994 bond market crisis.[3] In 1995, after finishing up 25% in another stellar year, he closed his fund stating, "I thought there must be something more virtuous, more ennobling to do with one's life than make rich people richer," before making a 2004 comeback to head WisdomTree Investments, a fund with nearly US$64 billion in assets under management.[2]

Michael Steinhardt
Born (1940-12-07) December 7, 1940
New York City, New York, U.S.
Alma materUniversity of Pennsylvania, B.S. 1960
OccupationInvestor, hedge fund manager, philanthropist
Years active1967 - present
Known forLeadership of Steinhardt Partners and Wisdom Tree Investments, realizing a multi-year return on investment of 24.5%
Net worthUS$1.1 billion (October 2018)[1]

In a January 2014 article by Bloomberg, he was referred to as "Wall Street's greatest trader."[4][5] Forbes Magazine reported his net worth at $1.1 billion as of October 2018.[1]

Early life and education

Steinhardt earned a BS at the Wharton School of the University of Pennsylvania, graduating in 1960. He started his career working for the mutual fund Calvin Bullock and the brokerage firm Loeb, Rhoades & Co. (the precursor to Shearson Loeb Rhoades).[6] Steinhardt's father was his first investment client giving his son envelopes stuffed with cash to put in the stock market giving him seed money to begin his investment career.[6]

Investment career

Early career

Working as an analyst at Loeb, Rhoades & Co., 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).

Steinhardt Partners

In 1967, using earnings from his investments, Steinhardt founded the hedge fund Steinhardt, Fine, and Berkowitz (later Steinhardt Partners) with co-investors William Salomon, former managing partner of Salomon Brothers and Jack Nash, founder of Odyssey Partners.[6] Steinhardt Partners averaged an annualized return for its 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. 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.[7] In his book, "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.

WisdomTree Investments

In 2004, Steinhardt came out of retirement to work for Index Development Partners, Inc.,[8] 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 July 2018, WisdomTree had $41.2 billion under management.[9] During the fall of 2007 and 2008, WisdomTree's growth stagnated, as the stock market, especially the financial sector, in which WisdomTree's dividend-based funds are overweighted, tanked, as did WisdomTree's stock. However, in recent months, as the WisdomTree funds tended to outperform their "bogies," asset growth resumed its earlier pace and its stock price appreciated accordingly.[4]

Personal life
Ceded to American Friends of the Israel Museum by Judy and Michael Steinhardt: St. Peter in Prison (The Apostle Peter Kneeling), Rembrandt, 1631.

In 1967, Steinhardt met his future wife Judy in a car pool he organized. During one of the carpools into New York City, he mentioned the name of the grain elevator company Colorado Milling and Grain Elevator. Judy mentioned the company to her father who invested in the company and made a substantial profit after Colorado Milling was acquired by Great Western Sugar in 1968; the merged company was renamed Great Western United. Judy is the chairwoman of New York University's Institute of Fine Arts and of the American Friends of the Israel Museum.[10] They have three children: David, Daniel and Sara.[11] His daughter, Sara, a former journalist and parenting columnist for The New York Sun, is married to Mark Bloom and is the president of the Hebrew Language Academy Charter School in Brooklyn.[12]

In Sebastian Mallaby's 2010 book entitled More Money Than God: Hedge Funds and the Making of a New Elite, he dedicated a chapter to Michael Steinhardt. He described Steinhardt as a "lover of botany and a collector of exotic fauna," living in his retirement "on his country estate an hour's drive north of New York City." Mallaby includes a photo of Steinhardt "dancing on his estate opposite... an elegant blue crane . . . that had taken to courting him with a graceful gavotte."[13]

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. In his book, 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.[14]

Steinhardt is an art collector, especially of antiquities. Highlights of his Judaica collection are viewable online. A special exhibition, "Ancient Art of the Cyclades", held at the Katonah Museum of Art included some pieces owned by him. He also sits on the American advisory board of Christie's, the art & antiques auction house.[15] In January, 2018, investigators raided his New York apartment in order to seize looted antiquities [16]

Political and economic views

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.[17] 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.

Steinhardt is a strong supporter of the State of Israel, which he regards as the "Jewish miracle of the 20th century". He views Israel as "the most moral state on this planet", and in a 2017 interview said "The more one understands about Israel, the more comfortable one becomes with the politics of the Israeli government."[18]

In 2001, Steinhardt made his foray into publishing, he along with several other investors including Conrad Black, founded the New York Sun, a niche New York City newspaper 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.)[19] Steinhardt was an early promoter of the possible presidential candidacy of Michael Bloomberg in 2008.[20]

Wealth and philanthropy

Forbes Magazine reported Steinhardt's net worth at US$1.1 billion as of October 2018.[1] The Steinhardt School of Culture, Education and Human Development at New York University bears his name in recognition of two $10 million donations.[21] In the 1990s, Steinhardt bought and donated Steeple Jason Island and Grand Jason Island in the Falkland Islands to the Wildlife Conservation Society (WCS), along with US$425,000 for a research station to be named after himself and his wife.[22] Steinhardt invested in baseball teams, owning part of the Miami Marlins and the Los Angeles Dodgers.

Jewish causes

Steinhardt is chairman of the board at The Steinhardt Foundation for Jewish Life and Taglit-Birthright Israel. He also makes public appearances, speaking with young Jewish kids through organizations such as Ezra USA and RAJE.[23] He has been an active philanthropist, donating over $125 million to Jewish causes. He and Charles Bronfman co-founded Taglit-Birthright Israel, which has to date sent over 500,000 young Jews aged 18–26 on a 10-day trip to Israel without charge. In 2009 Steinhardt gave the American Hebrew Academy $5 million. In addition, to help with its fundraising, AHA (American Hebrew Academy) released an advertisement featuring his endorsement.[24]

Steinhardt has founded a network of Hebrew-language charter schools, which are secular and open to both Jews and non-Jews. He has said "these schools teach Hebrew in a way that is demonstrably superior to Jewish day schools".[18]

Steinhardt is part of the "Mega Group" - a loosely organized club of 20 of wealthy and most influential Jewish businessmen. The "Mega Group" was formed by Leslie Wexner, chairman of Limited Inc. and Charles and Edgar Bronfman Sr., chairmen of Seagram.[25]

Investigation into inappropriate sexual remarks

On September 12, 2018 The Jewish Week reported that Hillel International was investigating Steinhardt for unwelcome “inappropriate sexual remarks” by two female employees of one of the many organizations he supports. The Jewish Week story quoted “sources close to the investigation” as saying that since, 2015, when the first complaint by a female employee occurred, it has been a “practice” within the organization for no female employee to have meetings with Steinhardt alone. The second woman making allegations received a written apology from Steinhardt, dated Aug. 23, 2011, acknowledging his inappropriate comments made toward her and two male colleagues at a meeting the year before. The report noted that Hillel had “quietly” removed his name from the board of governors listed on their website while the organization was investigating the claims.[26][27] Hillel made an official statement that the complaints about sexual harassment by its donors were justified.[28] Steinhardt stated in response to the findings “If I had been told immediately about concerns regarding anything I said at the time, I would have apologized immediately. I only recently learned about this investigation when Hillel called me about comments I made several years ago. I am sorry and deeply regret causing any embarrassment, discomfort or pain, which was never my intention.”[28] As of March 2019, six women have claimed that Steinhardt had made sexual requests of them.[29]

Legacy and awards

In 2008, he was inducted into Institutional Investors Alpha's Hedge Fund Manager Hall of Fame along with Alfred Jones, Bruce Kovner, David Swensen, George Soros, Jack Nash, James Simons, Julian Roberston, Kenneth Griffin, Leon Levy, Louis Bacon, Paul Tudor Jones, Seth Klarman and Steven A. Cohen.[30]

See also

References
  1. "Michael Steinhardt". Forbes. Retrieved 2018-10-28.
  2. "Michael Steinhardt, Wall Street's Greatest Trader, Is Back -- And He's Reinventing Investing Again". Forbes. Retrieved April 20, 2017.
  3. The great bond massacre - Fortune, December 1994; republished 3 February 2013
  4. Noer, Michael. "Michael Steinhardt, Wall Street's Greatest Trader, Is Back -- And He's Reinventing Investing Again". Forbes. Retrieved 2017-02-18.
  5. Sebastian Mallaby (2010). More Money Than God, pg.41
  6. Lenzner, Robert (November 8, 2001). "Michael Steinhardt's Voyage Around His Father". Forbes.com. Archived from the original on 2013-01-23.CS1 maint: bot: original URL status unknown (link)
  7. "Michael Steinhardt's Voyage Around His Father - Forbes.com". Forbes. November 8, 2001. Archived from the original on January 23, 2013.
  8. (PDF) http://www.wisdomtreeinvestments.com/press/pdf/IDP-Completes-$9-Million-Financing.pdf. Retrieved May 10, 2007. Missing or empty |title= (help)
  9. "WisdomTree Investments, Inc. - Investor Relations". Wisdomtreeinvestments.com. Archived from the original on 2006-11-16. Retrieved 2014-08-06.
  10. "WEDDINGS/CELEBRATIONS; Anna Hoffman, David Steinhardt". New York Times. April 4, 2004.
  11. Archived July 29, 2012, at the Wayback Machine
  12. Julie Wiener. "Sara Berman, 35". The Jewish Week. Retrieved 2014-08-06.
  13. Patterson, Scott (16 June 2010). "The Long and Short of It: You'd be secretive, too, if you were making billion-dollar bets". Wall Street Journal. Retrieved 31 December 2015.
  14. Lenzner, Robert (November 8, 2001). "Michael Steinhardt's Voyage Around His Father". Forbes. Archived from the original on 2013-01-23.CS1 maint: bot: original URL status unknown (link)
  15. "Advisory Board". Christies.com. Retrieved 2014-08-06.
  16. "Looted Antiques Seized From Billionaire's Home, Prosecutors Say". The New York Times. 5 January 2018.
  17. McCarthy, Daniel (November 17, 2003). "Most Favored Democracy". Amconmag.com.
  18. Ben Sales, Michael Steinhardt thinks American Jews need to stop focusing on religion, Jewish Telegraphic Agency; June 9, 2017.
  19. Vickers, Marcia (July 18, 2005). "The Rich Boys". Business Week.
  20. Heilemann, John (December 4, 2006). "His American Dream". Nymag.com.
  21. http://www.nyu.edu/nyutoday/archives/14/04/steinhardt.nyu
  22. "News from Zoos: March and April 2002". Umich.edu. Retrieved 2014-08-06.
  23. "rajeusa.com". rajeusa.com. 2014-05-29. Retrieved 2014-08-06.
  24. Sales, Ben (July 31, 2012). "A Jewish dead poets' society?". The Times of Israel.
  25. Titans of Industry Join Forces To Work for Jewish Philanthropy, The Wall Street Journal, 4 May 1998
  26. Sommer, Allison Kaplan (2018-09-13). "Report: Jewish-American Philanthropist Michael Steinhardt Accused of 'Inappropriate Sexual Remarks'". Haaretz. Retrieved 2018-09-14.
  27. "Hillel Investigating Allegations Against Major Philanthropist". Retrieved 2018-09-14.
  28. Rosenblatt, Gary. "Hillel Finds 'Complaints Were Justified' On Sexual Harassment By Donors". jewishweek.timesofisrael.com.
  29. Michael Steinhardt, a Leader in Jewish Philanthropy, Is Accused of a Pattern of Sexual Harassment
  30. "Cohen, Simons, 12 Others Enter Hedge Fund Hall". Institutional Investor. Institutional Investor LLC. 23 September 2008. Retrieved 16 June 2019.

Further reading
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