Gerald Tsai
Encyclopedia
Gerald Tsai Jr. was a financier
and fund manager who pioneered the use of performance funds in money management during the 1950s and 1960s, and later turned a canning company into financial services giant Primerica. After starting Fidelity Investments
' first publicly sold aggressive growth fund in 1958, the Fidelity Capital Fund, he later founded the investment management firm the Manhattan Fund, an aggressive growth fund, in 1965.
An early proponent of momentum investing
, Tsai's specialty was concentrating his portfolios on narrow batches of glamour stocks, including Xerox
and Polaroid Corporation
, at a time when broad diversification
was the prevailing wisdom.
, just as the fund's superior results were declining and as the bull market was starting to wane. He remained with Tsai Management, the company he had founded to manage the Manhattan Fund, after the sale, and resigned in 1973.
- a former component of the Dow Jones Industrial Average
- in 1982. Tsai later gained control of the company. American Can was a container production and food packaging business, and Tsai orchestrated its shift toward the more lucrative financial services
sector. In 1982 American Can bought Associated Madison Companies, a life insurance company. In 1997, Tsai purchased the financial firm Smith Barney
for $475 million. By this time, the combined company had changed its name to Primerica to reflect its financial focus and Tsai was Chairman and Chief Executive Officer, making him the first Chinese-American to lead a Dow Jones Industrials company. A year later, Primerica and Commercial Credit Group, headed by Sanford I. Weill
were combined in a $1.65 billion deal. With 1.5 million shares, Tsai remained the largest shareholder and was named a director, while Weill ran the company. Tsai received a golden parachute worth an estimated $40 million.
of numerous companies including Apollo Investment Corporation, Rite Aid
, Saks
, United Rentals
and Zenith Insurance Company.
of Boston University
from 1967 to 1977, and from 1988 to 2002. Tsai served as an honorary member of the board until his death. The Tsai family donated $7.5 million to the university to fund the creation of the Tsai Performance Center and the Tsai Fitness Center. Tsai was on the Board of Trustees of the NYU Langone Medical Center
and provided funding for the Gerald Tsai Transpantation Unit. Tsai was also actively involved in philanthropy through the Gerald Tsai Foundation.
that his father died in Manhattan
of multiple organ failure on July 9, 2008.
Financier
Financier is a term for a person who handles typically large sums of money, usually involving money lending, financing projects, large-scale investing, or large-scale money management. The term is French, and derives from finance or payment...
and fund manager who pioneered the use of performance funds in money management during the 1950s and 1960s, and later turned a canning company into financial services giant Primerica. After starting Fidelity Investments
Fidelity Investments
FMR LLC or Fidelity Investments is an American multinational financial services corporation one of the largest mutual fund and financial services groups in the world. It was founded in 1946 and serves North American investors. Fidelity Ventures is its venture capital arm...
' first publicly sold aggressive growth fund in 1958, the Fidelity Capital Fund, he later founded the investment management firm the Manhattan Fund, an aggressive growth fund, in 1965.
An early proponent of momentum investing
Momentum investing
Momentum investing, also sometimes known as "Fair Weather Investing", is a system of buying stocks or other securities that have had high returns over the past three to twelve months, and selling those that have had poor returns over the same period...
, Tsai's specialty was concentrating his portfolios on narrow batches of glamour stocks, including Xerox
Xerox
Xerox Corporation is an American multinational document management corporation that produced and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies...
and Polaroid Corporation
Polaroid Corporation
Polaroid Corporation is an American-based international consumer electronics and eyewear company, originally founded in 1937 by Edwin H. Land. It is most famous for its instant film cameras, which reached the market in 1948, and continued to be the company's flagship product line until the February...
, at a time when broad diversification
Diversification (finance)
In finance, diversification means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, and often less risk than the least risky of...
was the prevailing wisdom.
Early career
Tsai joined Fidelity Management and Research in 1952, and was named vice president in 1960. By 1965, Tsai had sold his Fidelity stock and started the Manhattan Fund which won him widespread attention. When the fund first offered shares, a modest offering of 2.5 million shares quickly ballooned to a total of 27 million, bringing the fund $247 million in capital and representing what was at the time the biggest offering of an investment company. In 1968, he sold the fund for $27 million in stock to the CNA Financial CorporationCNA Financial Corporation
CNA Financial Corporation is a financial corporation based in Chicago, Illinois, United States, and noted for its tall red headquarters building, CNA Center. Its principal subsidiary, Continental Casualty Company was founded in 1897. CNA was incorporated in 1967...
, just as the fund's superior results were declining and as the bull market was starting to wane. He remained with Tsai Management, the company he had founded to manage the Manhattan Fund, after the sale, and resigned in 1973.
Primerica
Tsai became Vice Chairman of American Can CompanyAmerican Can Company
The American Can Company was a manufacturer of tin cans. It was a member of the Tin Can Trust, that controlled a "large percentage of business in the United States in tin cans, containers, and packages of tin." It was formerly a member of the Dow Jones Industrial Average from 1959–1991, though...
- a former component of the Dow Jones Industrial Average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
- in 1982. Tsai later gained control of the company. American Can was a container production and food packaging business, and Tsai orchestrated its shift toward the more lucrative financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
sector. In 1982 American Can bought Associated Madison Companies, a life insurance company. In 1997, Tsai purchased the financial firm Smith Barney
Smith Barney
Morgan Stanley Smith Barney is a retail brokerage joint venture between Morgan Stanley and Citigroup.On January 13, 2009, Morgan Stanley and Citigroup announced that Citigroup would sell 51% of Smith Barney to Morgan Stanley, creating Morgan Stanley Smith Barney, which was formerly a division of...
for $475 million. By this time, the combined company had changed its name to Primerica to reflect its financial focus and Tsai was Chairman and Chief Executive Officer, making him the first Chinese-American to lead a Dow Jones Industrials company. A year later, Primerica and Commercial Credit Group, headed by Sanford I. Weill
Sanford I. Weill
Sanford I. "Sandy" Weill is an American banker, financier and philanthropist. He is a former chief executive officer and chairman of Citigroup. He served in those positions until October 1, 2003, and April 18, 2006, respectively....
were combined in a $1.65 billion deal. With 1.5 million shares, Tsai remained the largest shareholder and was named a director, while Weill ran the company. Tsai received a golden parachute worth an estimated $40 million.
Other business interests
Later in his life, Tsai re-entered the insurance industry, becoming Chief Executive Officer of the Delta Life Corporation. In 1997, Tsai sold Delta Life to AmerUs Life Holdings for $185 million. Tsai was on the Board of DirectorsBoard of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
of numerous companies including Apollo Investment Corporation, Rite Aid
Rite Aid
Rite Aid is a drugstore chain in the United States and a Fortune 500 company headquartered in East Pennsboro Township, Pennsylvania, near Camp Hill. Rite Aid is the largest drugstore chain on the East Coast and the third largest drugstore chain in the U.S....
, Saks
Saks Incorporated
Saks Incorporated , founded in Birmingham, Alabama in 1998, is headquartered in New York City, New York, and is a Fortune 1000 operator of high-end department stores in the United States under the nameplate Saks Fifth Avenue. Saks evolved from Proffitt's Inc. after Proffitt's changed its name in...
, United Rentals
United Rentals
Founded in 1997 by Bradley S. Jacobs and seven others, United Rentals, Inc. is the largest equipment rental company in the world, with more than 600 rental locations throughout the United States, Canada, and Mexico. Their diverse customer base includes construction and industrial companies,...
and Zenith Insurance Company.
Philanthropy
Tsai was a TrusteeTrustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
of Boston University
Boston University
Boston University is a private research university located in Boston, Massachusetts. With more than 4,000 faculty members and more than 31,000 students, Boston University is one of the largest private universities in the United States and one of Boston's largest employers...
from 1967 to 1977, and from 1988 to 2002. Tsai served as an honorary member of the board until his death. The Tsai family donated $7.5 million to the university to fund the creation of the Tsai Performance Center and the Tsai Fitness Center. Tsai was on the Board of Trustees of the NYU Langone Medical Center
NYU Langone Medical Center
NYU Langone Medical Center is an academic medical center in New York City affiliated with New York University. It was named to the Honor Roll of U.S. News "Best Hospitals" in the nation for 2009-2010. The Medical Center comprises NYU School of Medicine and three hospitals: Tisch Hospital, the Rusk...
and provided funding for the Gerald Tsai Transpantation Unit. Tsai was also actively involved in philanthropy through the Gerald Tsai Foundation.
Death
Christopher Tsai, a hedge fund manager and president of Tsai Capital, told The New York TimesThe New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
that his father died in Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
of multiple organ failure on July 9, 2008.